Sustainability data firm EcoVadis raises US$500m from investors including GIC, gets unicorn status

SUSTAINABILITY data firm EcoVadis has raised US$500 million to become one of the sector's first "unicorns", its co-chief executive told Reuters, as demand from companies to track their performance on environmental and social issues surges.

A unicorn is an unlisted firm valued at US$1 billion or more.

The financing, led by private equity firms Astorg and BeyondNetZero, General Atlantic's climate investing arm, as well as Singapore's GIC and Princeville Capital, is the largest equity fundraising to date for such a company, EcoVadis said.

It takes the total capital raised by the company to over US$725 million.

Used by more than 95,000 businesses across 200 industry categories and 175 countries, EcoVadis provides ratings on environmental, social and governance-related (ESG) issues and helps create plans for companies to improve their score.

Unlike most ESG ratings providers, the bulk of EcoVadis' coverage is of smaller, often private companies that make up the majority of larger companies' supply chains.

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Understanding small suppliers' ESG performances is becoming increasingly important for large companies as they come under regulatory pressure to improve the sustainability of their supply chains and help meet their own climate goals.

The European Commission recently proposed rules that would force boards to check suppliers do not use slave or child labour and respect environmental standards.

General Motors and Deutsche Bank are among leading firms recently to reference EcoVadis when launching plans to tighten up the ESG performance of suppliers.

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"We see a tipping point in the market. Everything is really accelerating," said co-founder and co-CEO Frederic Trinel. "When we look at the numbers, this year EcoVadis will grow 50 per cent, last year we grew 45 per cent, the previous year 35 per cent, and the one before 30 per cent. So every year, we've been gaining 5 points of growth."

Trinel said the funding would help the company's growth plans, including through acquisitions, in the North American and Asian markets and bolster its technology. It employs around 1,300 staff.

"Most of our growth today is coming from the North American market. Getting on board General Atlantic in addition to Astorg as the co-leads in this round is really a way to continue to accelerate in the North American market," he said.

The US Securities & Exchange Commission is currently mulling new ESG disclosure rules for companies, although the role of such information in rewarding or penalising boards is hotly contested.

Despite that, Rhea Hamilton, managing director at BeyondNetZero, said the global drive for companies to get to grips with their impact on the environment and society would drive demand for better data.

"The amount of times that ESG is now being brought up in the boardroom is phenomenal relative to what it was maybe ten years ago, and that's not going away," she told Reuters. REUTERS