4 Reasons ESG Means ‘Green’ To Private Equity
Tackling environmental, social and governance (ESG) issues is increasingly embedded in business strategy. I interviewed Crowe LLP leaders to write this branded feature about the long-term returns of an ESG strategy. Part of a 4-article ESG series.
With investors paying increased attention to environmental, social and governance (ESG) issues, the message is clear: Companies that want to stand out in the capital markets can’t afford subpar ESG results.
Here are four reasons why private equity firms of all sizes are taking ESG seriously—and why companies across industries should consider initiating or improving their approach:
Reason 1: How a company handles its ESG responsibilities reflects on its ability to protect value and manage risk
“For many institutional investors, a strong ESG profile is really a prerequisite,” says Doug Kerwin, who works in advisory at the accounting, consulting and technology services firm Crowe. “Many organizations have committed themselves to one of several international initiatives such as the Principles for Responsible Investment and the Net-Zero Asset Owner Alliance and thus must buy or finance companies that will not break those commitments. The effect spills down to middle-market private equity and private credit organizations, inclusive of their current and prospective portfolio companies.” Indeed, the effect spills down to organizations of all sizes.