ESG has arguably been the most talked-about topic in private equity – publicly, at least – says Andrew Green, a corporate partner at Addleshaw Goddard. But what is being said and what does it mean in the buy-out world?
ESG demands are putting pressure on private equity to effect change in portfolio companies. That pressure is coming vertically from limited partners (LPs) and general partners (GPs), and horizontally from across the competitive landscape. But first, what exactly is ESG?
Interestingly, that’s where the divergence begins. Most public conversations in the wider business world, beyond the private equity space, are focused on the ‘E’ – environmental – and the drive to net zero. However, most of private equity’s focus is on the ‘S’ (social) and ‘G’ (governance), together with ‘social impact’ – although they’re still maintaining a very public articulation of the importance of the ‘E’.
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