ESG scrutiny gives a boost to sustainability platforms

The race to supply companies with the tools needed to measure and communicate their ESG goals is heating up.

Sustainability ratings provider EcoVadis has raised $500 million led by Astorg and BeyondNetZero, General Atlantic’s climate investing venture. The round gave EcoVadis a valuation of at least $1 billion, Axios reported.

The cash, which will be used in part for acquisitions, gives EcoVadis an edge in the burgeoning category of sustainability measuring startups. Other well-funded companies in the space include Persefoni, Watershed and Sweep, which are all developing climate-specific platforms.
 

 

Tighter rules and clearer metrics for ESG and climate-related goals have created an opportunity for software startups that simplify the process of measuring everything from emissions reductions to governance risks.

The Securities and Exchange Commission is looking to crack down on ESG greenwashing in investment funds. Proposed rules would require funds carrying the ESG label to file additional disclosures to investors. The SEC has also presented a proposal that would force companies to disclose their greenhouse gas emissions.

Meanwhile, the public debate over the uses and abuses of ESG ratings was renewed last month after Tesla was ejected from the S&P 500 ESG Index.

Despite its contribution to hastening zero-emissions transportation, Tesla faces accusations of racial discrimination and scrutiny for its handling of fatal car crashes involving its assisted driving software. CEO Elon Musk called the ratings a “scam,” citing the inclusion of Exxon Mobil in the index.
 

Related read: ESG, Impact, and Greenwashing in PE and VC 

 
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