Private Equity Is Leaving Billions of Dollars in Sustainability Value on the Table.

Tensie Whelan

By Tensie Whelan, Florent Nanse, and Julien Marchese

Private equity has a significant opportunity to create financial and societal value through sustainability.  PE firms that invest in improving the management and quality of companies to enable increased valuation multiples can also bring sustainability to their value creation tool box.  Unfortunately, many PE firms do not yet know how to identify, create or capture that value.

Our research into both PE firms (GPs) and institutional investors (LPs) finds that most are focused solely on identifying major red flags during due diligence and collecting a few ESG reporting metrics once an investment is made.

Our assertion that sustainability drives value is based on our Return on Sustainability Investment (ROSI™) research across industries that has identified nine mediating factors that drive better financial performance when companies embed sustainability into corporate strategy: operational efficiency, risk mitigation, improved employee productivity and retention, innovation, sales and marketing, customer loyalty, earned media, and better supplier and stakeholder relations.

Read the full ImpactAlpha article.
Tensie Whelan is a Clinical Professor of Business and Society and Director of the Center for Sustainable Business.