CEO of Lightrock: Long-term rewards will be higher for sustainable businesses.
Source: https://pitchbook.com/news/articles/Lightrock-sustainable-investing
Author: David Stevenson
Sustainable investing has gained momentum in recent years as many investors prioritize social and environmental impact alongside financial returns.
Lightrock, a London-based growth equity firm that spun out of LGT Group, is one of several fund managers that have developed a portfolio with a focus on impact investments. The firm, which has been led by Pal Erik Sjatil since 2020, has closed three funds since its inception: a $900 million global growth fund; a $300 million Latin America-focused vehicle; and a $860 million global climate fund, which closed in October.
Lightrock invests in Europe, India, Africa and South America but it has also made some notable investments in the US, including companies such as Mainspring, Group 14 and Liqid. We spoke with Sjatil about today's opportunities in sustainable investing. The following interview has been lightly edited for length and clarity.
When it comes down to the individual company, an independent quality assessment around impact should be done, and you could argue you have quite a similar discussion as you would have on the returns. If it's a climate deal, we definitely look at what impact the company would have on CO2 reductions, for instance.
In an environment where a lot of things are labeled "green," it's important to have both a disciplined approach and an acceptance that there will be a degree of variability in outcome. Greenwashing is not good, and we need to combat it. At the same time, we must also not assume that we can predict everything that might happen 10 years from now.