How Sustainable are Swedish PE Investments?

    Stockholm (NordSIP) –  On July 15th, the Swedish Private Equity & Venture Capital Association (SVCA) launched the first joint sustainability report for the Swedish private equity (PE) industry. The report attempts to create a new approach to systematically monitor, measure and clarify key sustainability-related figures in Swedish portfolio companies. The report was produced in partnership with HUI, an independent investigation and survey company.

    The ESG Status of Swedish Private Equity report aims to increase transparency and is based on comparative figures produced in line with the UN Sustainable Development Goals. The report finds that Swedish PE portfolio companies’ performance along sustainability KPIs is on par with their counterparts listed on Nasdaq OMX Stockholm.

    “The report provides a joint overview of how the private-equity industry in Sweden performs in terms of sustainability for the first time. The results are encouraging, and this is extra gratifying since portfolio companies often have less maturity than companies in the listed environment. Our members have a long-time awareness about the fact that active work is required on sustainability issues such as climate, anti-corruption, and diversity in order to create long-term value development. Furthermore, are SVCA and our members actively working to increase the diversity across management teams and company boards through both company-specific as well as industry-wide initiatives such as Level 20,” says Monalotte Theorell Christofferson, Chairman of the Board of SVCA.

    The private equity sector wholly or partly owns 1,400 portfolio companies in Sweden with almost 170,000 employees, which corresponds to more than 3% of all employees in Sweden. Private equity has since 2007 invested more than SEK 350 billion in Swedish companies and contributes up to 5% of Sweden’s GDP.

    According to the analysis, employment growth reportedly grew by 9% between 2019 and 2020 in PE-owned companies, which have 26% of women in their management teams, the same proportion as on Nasdaq OMX Stockholm. The share of women on the Board of Directors (19%) are fewer than in listed companies (33%).

    Carbon dioxide emissions from the portfolio companies, in relation to sales, are in line with comparable companies on Nasdaq OMX Stockholm. The direct emissions are slightly higher while the indirect ones are slightly lower. In absolute terms, however, private equity-owned portfolio companies emit less carbon dioxide than companies on Nasdaq OMX Stockholm.

    “The Swedish private-equity industry and its participants, who have worked with these issues at length have now acted to jointly clarify their sustainability work openly and regularly. Several of the results from the study show that the portfolio companies perform close to or better than listed companies, which confirms expectations, e.g., the strong growth in employment numbers should be understood based on the growth and change agenda that private-equity ownership entails, while we also know that diversity goals are a continued and prioritized area of development for many companies,” says Isabella de Feudis, CEO of SVCA.

    Image by Lena Lindell from Pixabay

    Filipe Albuquerque
    Filipe Albuquerque
    Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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