BDC, the Business Development Bank of Canada, has launched a new Environmental, Social and Governance (ESG) reporting template, the first of its kind to be publicly available and shared widely across the Canadian venture capital industry. The template serves as a reporting tool for Canadian VC and mid-market private equity funds to track and report on key ESG metrics at the firm, fund, and portfolio company level.
This initiative is anticipated to drive momentum within the industry as BDC Capital will expect all its portfolio general partners (GPs) and their underlying portfolio companies to report their ESG metrics on an annual basis. This alone will capture the majority of the Canadian VC market given that BDC’s investment arm is a limited partner in private independent VC funds representing 62 per cent of the capital being invested in Canada and collectively managing $20 billion.
“No organization is immune from the impacts of the social and environmental challenges of our time. We know Canadian firms want to be agents for good and value the competitive business advantages it offers, but they don’t always have the knowledge, tools, or capital to make it happen,” said Sandra Odendahl, senior vice president and head of sustainability and diversity at BDC. ‘’Our role as a development bank is to give them those tools, with a goal of creating more sustainable businesses and a stronger, greener, and more inclusive Canadian economy in the process.”
As one of Canada’s VC industry leaders, BDC Capital held consultations with a wide range of industry partners and key stakeholders from across Canada on the need to bring more transparency and embed ESG disclosure and reporting standards within the Canadian venture capital space. This collaboration took into account the requirements of investors and other industry participants as it sought to harmonize with international and national standards, including the Institutional Limited Partners Association (ILPA) ESG and Climate assessment framework, while providing an important resource in the design and execution of their respective sustainability strategies.
“BDC Capital is more than an investor, we support portfolio companies and funds all along their growth journey and are playing a catalyst role within the entire ecosystem. ESG monitoring and reporting has become a priority for a significant number of Canadian investors who understand that every organization must do its part to grow a more sustainable economy” adds Alison Nankivell, senior vice president of fund investments and global scaling at BDC Capital.
The ESG reporting template builds on a similar diversion, equity and inclusion (DEI)-themed reporting template launched in 2022. The two templates will be merged in 2024 and updated as industry standards and best practices evolve over time. BDC will create a benchmark of data on the state of ESG within the industry and report findings on an annual basis.
“The launch of BDC Capital’s ESG Reporting Template is an important step in creating alignment for Canadian companies and investors. By providing a framework for ESG, this template will help investors make informed decisions and promote responsible investment practices. The CVCA recognizes the value of ESG in driving long-term financial performance and support this initiative as a vital step in enhancing the competitiveness of the Canadian market.” said Kim Furlong, CEO of the Canadian Venture Capital and Private Equity Association (CVCA).
“In today’s economy, we need innovative companies to drive sustainable growth. Integrating best practices that help address global ecological challenges, encourage measurement and reporting of environmental, social, and governance (ESG) best practices will help all stakeholders to collaborate in achieving net-zero goals. BDC Capital’s ESG reporting template is an important step in this direction and we at Cycle Capital commend BDC’s leadership in setting high standards in the Canadian venture capital industry’’ added Andrée-Lise Méthot, founder and managing partner of Cycle Capital.
BDC has committed to help Canada reach its 2030 and 2050 climate targets and intends to be carbon neutral in its operations by 2025. The bank’s new Sustainability strategy guides its ambition to enable stronger, greener, and more inclusive businesses through four pillars: economic resilience, social inclusion, environmental stewardship, and stakeholder collaboration.
Featured image credit: istock.
