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Given their unique access to private companies and long-term investment horizons, private equity (PE) firms play a pivotal role in driving sustainability, according to Deloitte, a professional services firm, in an article this week called "How private equity can pave the way to a better future".
The article states that sustainability is quickly becoming a categorical imperative for private equity firms.
• PE firms manage €744bn (US$786bn) in private European companies and influence global economic outcomes with over €1.15tln in AuM.
• Their control and board roles enable direct impact on sustainability practices, making PE the most represented asset class in impact investing.
Furthermore, regulation, LP demand and value creation make this moment the time to mature in sustainable investing.
• Regulation: Compliance with the Corporate Sustainability Reporting Directive (CSRD) and frameworks like SFDR, TCFD and ISSB drives firms to focus on sustainability.
• LP (Investor) Demands: Investors increasingly require ESG (Environmental, Social, Governance) reporting, with many demanding transparency and action.
• Value Creation: Evidence shows sustainability improves financial performance. For instance, assets with strong ESG profiles command premiums, and higher ESG scores correlate with higher valuation multiples.
GPs can take practical step...................... To view our full article Click here
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