Gradual Progress in DEI, Lagging Climate Commitment in Canada's Venture Capital and Private Equity Industry: BDC report

Key findings:

• Diverse representation continues to increase since 2021, with the percentage of General Partners (GPs) where women make up at least half of employees increasing by 16% and visible minorities by 9%
• Gender diversity remains a gap at the GP ownership and investment committee levels, with 55% of GPs entirely male-owned and 21% of investment committees composed exclusively of men
• Slow integration of climate-related initiatives, with only 13, out of 49 GPs who responded to this question, having set a carbon-neutral objective or actively working toward one, a number that has decreased compared to last year

MONTRÉAL, Nov. 13, 2024 /CNW/ - BDC Capital is releasing today its annual findings on the state of Diversity, Equity, and Inclusion (DEI) and Environmental, Social, and Governance (ESG) within the Canadian Venture Capital (VC) and Private Equity (PE) industry, using its portfolio as a proxy. The report shows that while there has been some advancement, stronger industry leadership will remain crucial to continue building a more sustainable, diverse, and inclusive Canadian ecosystem.

DEI findings

The report highlights progress in diverse representation in the industry, particularly in gender diversity, but several metrics have remained relatively flat year-over-year. Diversity remains higher in more junior ranks of GPs. However, a positive 6% increase in GPs with at least one woman in the investment committee was observed, as well as a 13% increase in senior investment teams with a least one visible minority.

Results are anticipated to improve in the coming years, driven by a shift in mindset. This change, evidenced by the recent increase in HR and DEI policy implementation across the industry, underscores that meaningful evolution is a gradual and ongoing journey. For instance, this year's data reveals that 70% of GPs now have a DEI statement or strategy in place and 12% are working on one.

ESG findings

GPs are continuously improving on the integration of the social and governance aspects of ESG. An increasing number of GPs are identifying ESG risks during their due diligence and factoring them into their investment decision-making. Additionally, more GPs are evaluating their portfolio supply chains for ESG-related risks.

Conversely, this year's report shows a persistently low adoption of environmental measures. Notably, there has been a year-over-year decline in climate policy commitments. Some firms have retreated from their previously communicated plans, with even fewer GPs having a carbon-neutral objective this year compared to last.

Facilitating the integration of best practices and building capacity in DEI and ESG reporting

Leveraging its extensive reach across the Canadian VC and PE industry, BDC is uniquely positioned to identify industry trends. By collecting and publishing DEI and ESG data from its portfolio annually, the Bank aims to encourage the sharing of best practices, enabling all industry participants to elevate their standards and contribute to a more resilient industry, as well as sustainable long-term value creation. As a dedicated partner to the ecosystem, BDC has made available several resources, including a DEI toolkit, a Greenhouse gas emissions calculator and other educational resources, with the objective of supporting the ecosystem's efforts to build a more resilient, sustainable and competitive Canadian industry.

In addition to findings at the GP level of its portfolio, BDC is also presenting data at the underlying portfolio company level. Consult the report here.

Quote from Geneviève Bouthillier, Executive Vice President, BDC Capital

"At BDC, we are dedicated to our mission of elevating market awareness and further integrating DEI and ESG within Canada's VC and PE industry. By collaborating with the ecosystem, we aim to gradually develop an asset class that is more competitive and fosters sustainable value creation over time."

Quote from Paula Cruickshank, Senior Vice President, Fund Investments, BDC Capital

"Integrating DEI and ESG best practices in the VC and PE industry is a journey that demands time, commitment, and a collective effort to align with each firm's unique values and long-term goals. BDC's data collection exercise is designed to raise awareness and encourage advancements in DEI and ESG, which are essential steps towards building resilience in a rapidly changing world."

About BDC: 80 years as Canada's bank for entrepreneurs

BDC is a partner of choice for all entrepreneurs looking to access the financing and advice they need to build their businesses and tackle the big challenges of our time. Our investment arm, BDC Capital, offers a wide range of risk capital solutions to help grow the most innovative firms. BDC's development role means we are in a state of perpetual evolution – wherever entrepreneurs go and whatever the Canadian economy needs – we will be there to help them defy the odds. Eighty years later, that commitment remains very much alive. The financial value of BDC's services is estimated to add $23.6 billion in GDP to Canada's economy over the next five years. We are one of Canada's Top 100 Employers and Canada's Best Diversity Employers and the first financial institution in Canada to receive the B Corp certification in 2013. For more information on our products and services and to consult free tools, templates, and articles, visit bdc.ca or join BDC on social media.

SOURCE Business Development Bank of Canada

For further information: BDC Media Relations, [email protected]