The appetite for ESG integration in private equity has grown strongly since the 2nd edition of this guide in 2011. Limited Partners (LPs) and General Partners (GPs) realise that responsible investment can contribute to both value creation and risk mitigation in this asset class. However, given the relationship between the LPs, GPs and portfolio companies, there are certain challenges to implementing responsible investment in private equity.
This guide is for any LP seeking to develop its own approach to responsible investment with respect to its private equity investment strategy, including (but not limited to): venture capital, growth capital, mid-market, buy-out, mezzanine, coinvestments, secondary investments, distressed and special situations and funds of funds. It may also provide assistance to investors in other private market strategies if they use a private equity-style closed-ended fund structure, such as infrastructure and real estate.
This guide is not intended as a checklist, nor does it advocate altering a GP’s management role and discretion over decision-making. Some aspects may seem aspirational for some private equity participants. It aims to present insights and provide actionable ideas into how responsible investment can be implemented by a broad range of LPs and GPs.