ESG Factor Integration into Private Equity

Maria Cristina Zaccone and Matteo Pedrini
Additional contact information
Maria Cristina Zaccone: ALTIS Alta Scuola Impresa e Società, Università Cattolica del Sacro Cuore, L. Agostino Gemelli, 20123 Milano, Italy
Matteo Pedrini: ALTIS Alta Scuola Impresa e Società, Università Cattolica del Sacro Cuore, L. Agostino Gemelli, 20123 Milano, Italy

Sustainability, 2020, vol. 12, issue 14, 1-16

Abstract: Although more and more private equity (PE) firms are integrating environmental, social, and governance (ESG) factors into their investment strategies, there is no clear understanding of their reasons, the details of their activities, the tools they use or the barriers they face. Our study covers these gaps and provides an overview of current trends. We adopted a mixed-method approach, using both qualitative and quantitative data. We first interviewed ESG and PE experts and then submitted a survey to top PE players. Most PE firms integrate ESG issues because investors and other stakeholders pay increasing attention to them. We found that the tools used to assess ESG factors are checklists and that only a few PE firms used external advice from industry experts. Among the main barriers that PE firms face are difficulties in finding information and the lack of a comprehensive way to measure ESG issues. Our findings reveal that PE firms have two main approaches to ESG integration—risk management and value creation—and that the former is dominant. We contribute to the literature by explaining ESG integration in the PE industry and showing that an opportunity for value creation is being missed.

Keywords: ESG; private equity; due diligence (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://www.mdpi.com/2071-1050/12/14/5725/pdf (application/pdf)
https://www.mdpi.com/2071-1050/12/14/5725/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:14:p:5725-:d:385298

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().