Pitchbook Analyst Note: ESG, Impact, and Greenwashing in PE and VC

Peeling back the layers of ESG and Impact investing in PE, VC

While fund managers may aim to achieve the goal of doing well by doing good, they can take much different approaches to environmental, social, and governance and Impact investing.

Our latest analyst note explores how sustainable investments are defined and carried out in the private markets, focusing on the different schools of thought in ESG investing. Peeling back the layers of these philosophies—purist, pragmatist, and pluralist—reveals why they can lead to such different-looking portfolios in PE compared to VC.

Where advocates for one approach might see a legitimate sustainable investment program, skeptics might see “greenwashing”—a fund manager claiming sustainability but not following through. Investors are unlikely to rally around only one ESG or Impact philosophy and abandon the others, but each perspective represents an effort to cultivate a more sustainable economy.