The NYU Stern Center for Sustainable Business (CSB) is using its platform as a well-respected finance school, its credentials in ESG and sustainability, and its extensive network, to collaboratively develop an accountability framework and associated tools and convenings for making private equity (PE) more sustainable, based on extensive research and stakeholder engagement.  The initiative aims to provide investors, PE leaders, rural communities and civil society with the tools and insights to maximize PE’s potential to provide regenerative versus extractive capital. CSB has embarked upon a two-phase research and outreach initiative to improve accountability and societal performance of the private equity sector.   

The call for a move to stakeholder capitalism and place-based investments comes at a time when private equity, whose goals are generally focused on shareholder return, has become an owner of many companies nationally. PE owns hospitals, newspapers, schools, real estate, manufacturers, consumer brands, and retail, among other sectors. 

If the U.S. is to rebuild its economy, take care of key stakeholders such as workers and communities, and transform to stakeholder capitalism, private equity needs to be a positive player.  

CSB has initiated a robust academic review of the state of private equity in terms of its contribution to creating or extracting value and developed a Responsible Investing Framework that provides insights into the various categories of private equity impact, positive and negative. The framework  lays out the main categories of impact for the PE firms and their portfolio companies, including:

• management & human capital management
• financial engineering
• fund management
• strategy & innovation
• reporting transparency
• societal impact

The framework is explored further with examples and case studies in a whitepaper by NYU Stern CSB titled The Road to Responsible Private Equity.