ESG –Environmental, Social, and Governance, is emerging as the top trend for the decade for investors and startups. Korean startups that are innovating in ESG can expect more significant investments. According to the ‘Startup Investor Awareness Survey Report’ published by Startup Alliance, a data platform company, 77.9% of investment companies responded that they would maintain or expand ESG investment. Eight out of 10 startup investors surveyed plan to continue or expand ESG (environmental, social, governance)-related investments. Specifically, 56.6% said that they would maintain ESG investment above a certain level, and 21.3% said they plan to expand ESG investment as the core of their strategy.
The report investigated how startup investors perceive ESG, a major trend in domestic and foreign industries. The report contains the current status and prospects of 122 startup investors in Korea and ESG investment strategies.
70% of domestic startup investors prefer ESG
Investors judged that investing in consideration of ESG is helpful in ‘investment risk management.’ While only 38.5% answered that ESG investment is helpful for investment return, 60.6% responded that it is helpful for investment risk management.
The level of ESG interest in the startup investment ecosystem experienced by domestic startup investors was found to be 70 out of 100. Only 20.5% of the respondents answered that they were not interested or low, which indicates that ESG flow is spreading throughout the startup investment ecosystem.
As the reason for the increased interest in the investment ecosystem in ESG, ‘government policy and regulatory response (65.6%)’ was cited as the most significant reason. It was followed by ‘recognition of the importance of environmental and social issues (56.6%)’ and ‘customers (LP/investors) interest and demand (42.6%)’.
As the biggest barriers when investors consider ESG investment, they cited ‘difficulty in evaluation and performance measurement (25.4%)’ and ‘lack of ESG information and data necessary for investment (20.5%)’. 44.3% of investors said they plan to require portfolio companies to measure and manage ESG data within the following year.
“This report confirmed the perspectives and prospects on ESG in the domestic startup investment market through startups, investors, government officials, etc.,” said Choi Hang-jip, Head of Startup Alliance Center, and added, “ESG is an important subject of interest in the startup ecosystem.” Eunhwa Lee, Co-CEO of Triple Light, said, “The key to ESG is transparent and continuous communication with stakeholders who are affected by corporate business. It will be important.”
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