• 07-MAR-2012

  • SOURCE: PricewaterhouseCoopers LLP

Investors ramp up pressure on Private Equity responsible investment

The majority of Private Equity (PE) firms interviewed in a new study of responsible investment practices say their action on environmental, social and governance issues (ESG) is set to increase over the next five years, with investor concern the main, or in some cases the only, driver for taking action.

In the new report by PwC examining the PE industry's actions on responsible investment issues, 17 private equity houses were interviewed. This included six of the top ten largest global firms, and a further eleven of the top 50 largest global firms.

The firms said investor concern had been ramping up in recent years. While PE firms said they have made progress in measurement, reporting and evaluation, there is still some way to go to embedding rigorous, systematic measurement, monitoring and reporting on ESG strategy, action and value created.

The report found that some degree of ESG due diligence pre-acquisition was commonly reported, but locking the findings into the 100-day plan (or other targets set for the hold period) was not systematic. Unless this happens, the report warns that ESG action points risk being sidelined as niche issues, rather than being integrated into core business strategy and practice.