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RAPPORT

Private Equity Responsible Investment Survey 2019

Older and wiser: is responsible investment coming of age?

Private equity sector has a vital role to play in supporting sustainable development. It is therefore encouraging to see from the findings of PwC’s new Private Equity Responsible Investment Survey 2019 that it is a responsibility that many in the sector are starting to take extremely seriously.

The survey draws upon the views of 162 participants from 35 countries and territories, drawn from a combination of private equity (PE) houses, or General Partners (GPs), and their investors, or Limited Partners (LPs). It is the fourth such edition of the survey which means that PwC have been able to track the growing significance of responsible investment over the years, from the first one in 2013.

The results are encouraging. According to the survey, 81% of respondents says they report Environmental, Social and Governance (ESG) issues to the Board at least once a year, and nearly a third do so more regularly. Almost all (91%) respondents say they either have responsible investment policies in place, or are developing one (up from 80% in 2013).  

Most importantly, perhaps, are the signs that ESG concerns are at the heart of the investment process rather than from elsewhere in the business. More than a third (35%) say they have a team dedicated to responsible investment (compared to 27% in 2016). Almost three quarters (72%) are using or developing KPIs to track, measure and report on the progress of their responsible investment policies.

We can also see a reassuring commitment to linking investment to the UN’s Sustainable Development Goals. 67% of respondents have identified and and prioritised SDGs that are relevant to their investments, and 43% have a proactive approach to monitoring and reporting portfolio company performance against the SDGs.

Yet while it is fair to say that responsible investment is ‘coming of age’ in the private equity community,  it is still at the ‘young adult’ stage of development. The survey indicates that there is much to do, for both private equity houses and investors. While there is a growing concern about traditional ESG matters such as human rights and cyber security, as well as new emerging themes such as climate risk, many are yet to start taking enough action.  

There is also a risk of ‘impact-washing’ - where it is claimed that investments have a greater SDG-aligned contribution or positive impact than can be evidenced, or using positive examples of responsible investment to divert attention from other investments where less action has been taken.

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