Due to its growing size, and the levers it holds in setting the strategy for portfolio companies, the PE industry has a decisive impact on how the global economy addresses the key challenge of climate change and, more generally, whether companies are managed in a responsible manner. At the same time, the association between PE and sustainability has not always come naturally. Cross-linking conclusions from academic research with our survey of PE investors – as well as using our experience as a PE investor – we have analysed how PE investors approach RI. The following messages are a summary of our more in-depth paper.
- Both private equity (PE) and responsible investing (RI) have long-term investment horizons. By fostering the appropriate governance in portfolio companies, PE can facilitate their responsible transformation.
- Although the PE industry currently lags in the sustainability journey, it is catching up rapidly.
- Over the past decade, RI has been integrated into the different stages of the PE investment process; RI priorities vary across investors, but governance tends to dominate over climate and social elements.
- Challenges remain in terms of data availability and the lack of reporting standardisation. Any decision on RI should be taken at the highest institution level, to avoid facing possible mismatches regarding investments’ time horizon.
You can now read the full whitepaper at the link below
