Responsible investment: Creating value from environmental, social and governance issues

All participants consider ESG issues to some extent during investment appraisals
94% of participants believe ESG issues will become more material over the next five years
88% of participants believe that Limited Partner attention to ESG issues is set to increase in the next five years
94% of the participants we surveyed believe that ESG activities can create value
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The private equity industry response to the responsible investment agenda is evolving rapidly. Our recent survey of the private equity industry found that this trend looks set to continue in the near future with 94% of respondents saying they will be increasing their focus on responsible investment activities in the next five years.

The majority of survey participants believe that managing environmental, social and governance issues can create value, but far fewer are attempting to measure and value environmental, social and governance improvements. Over the coming years, demonstrating the value of an responsible investment approach will remain a key challenge for the industry.

Our survey explored several key areas: What is driving private equity houses to increase their focus on responsible investment? How is the industry tackling the challenge of valuing and measuring its responsible investment activities? How will the industry response evolve in the future?

Our report describes the results of our survey and presents our view on the key issues arising.

 
John Dwyer, Global Head of Deals and Private Equity discusses the findings of the report and their implications with Shami Nissan and Phil Case from our Sustainability and Climate Change team


Related thought leadership A geographic perspective: Contrasting approaches between US and European-headquartered Private Equity houses

Responses from the survey

UK-headquartered PE house

 

“There’s real potential to lose value in a portfolio company if you fail to focus sufficiently on managing ESG risks.”

European-headquartered PE house

 

“A sound approach to ESG issues can enhance both earnings and multiples. Companies with strong policies and practice in this area are much easier to sell.”