Collectively Harmonising ESG Reporting
Oliver Nixon and Dr Johannes Lenhard, VentureESG
It all started with continental Europe
ESG reporting in venture capital is finally catching up with the needs of a growing, interconnected ecosystem. Invest Europe’s 2024 GP-LP ESG Reporting Template, which VentureESG and a working group of large institutional (continental) European LPs (including EIF, KfW Capital, InvestNL, Enterprise Ireland, AP6, Tesi, and BPI France) helped update, drastically simplified, and streamlined the KPIs for the 2024/2025 reporting season. Beyond a harmonised approach on what to ask, the template also introduced proportionality in a more widespread way, with three sub-sheets for companies of different maturity.
At the same time, the how of reporting has been causing difficulties with a large variety of available software providers in the market, and only limited connectivity and interoperability between them. To address this issue, VentureESG, together with Invest Europe and a group of providers, developed an open-source machine-readable format of the updated Invest Europe template. This enables easier data transfer between platforms and supports greater consistency across the ecosystem.
This new white-label machine-readable format is based on the earlier version developed by Atlas Metrics for (and with) KfW Capital for their 2023/24 reporting cycle. The 2024/5 version was developed in partnership with a consortium of ESG software platforms, including Apiday, Atlas Metrics, AtomInvest, Kara, ImpactNexus, MetricESG, and Novata.
The feedback from the market on both pieces — the harmonised and more proportional template and the machine-readable format — has been very positive. The general conclusion we have been hearing: while the setup is not perfect (still too many KPIs, synchronization problems across platforms), it is not quite a wild west of templates and platforms anymore.
Replicating the process in the UK
Following the success of the consultation and harmonisation project in continental Europe, the UK is the rational next step. As an ecosystem, we can build on the work that ESG_VC (now merged into VentureESG) has already done with the BVCA, with three years of increasingly consistent startup-to-VC reporting.
Consequently, together with the British Business Bank and the BVCA, we have now begun a consultation process with a working group of institutional LPs in the UK. The goal is to produce an ESG reporting template aligned with the Invest Europe metrics for the next 2025/2026 reporting season. This will further support the UK VC GP/LP ecosystem's readiness for the opportunity of the Mansion House reforms, committed to bringing pension fund money into earlier-stage private markets.
With growing alignment across markets and better software infrastructure to support it, the future of ESG reporting in VC and for scaling companies is more coordinated and actionable than ever before. This will both form a better base for benchmarking and free up time to focus on material ESG action across funds and companies alike.
If you're an institutional LP active in the UK VC ecosystem, do let us know and we will loop you into the ongoing consultation process.