How PE firms are

incorporating ESG
How PE Firms are Incorporating ESG?

1.Formalizing ESG Commitments: Overview of ESG policy adoption among PE firms.

2.Integrating ESG in Investment Practices: Examination of how ESG considerations

are incorporated during investment sourcing and decision-making.

3.Operationalizing ESG in Portfolio Management: Discussion on managing portfolio

companies with a focus on ESG impact and preparing for ESG-influenced exits.
Formalizing ESG Commitments

• Widespread Policy Adoption: Highlighting the commitment of 91% of global PE firms

to formalize ESG through responsible investment policies.

• Public ESG Declarations: Noting that most of the largest U.S. PE fund managers
publicly incorporate ESG into their investment processes.

• Strategic ESG Alignment: Emphasizing that ESG policies represent a strategic

alignment with the future of responsible investing, setting the stage for
operationalizing these values.
Incorporating ESG in Investment Practices

• ESG Due Diligence: Outlining that the majority of top U.S. PE firms incorporate ESG
assessments as a standard part of their due diligence process for potential
investments.

• Staff Training on ESG: Highlighting the commitment to ESG education with two firms
providing specialized training for their investment teams on ESG factors.

• Identifying ESG Opportunities: Emphasizing the strategic move beyond risk

mitigation to proactively seeking investment opportunities with positive ESG profiles.
Operationalizing ESG in Portfolio Management

• ESG Management in Portfolio Companies: Highlighting that eight top U.S. PE firms
actively manage ESG issues within their portfolio companies, emphasizing diversity
and inclusion.

• Measuring ESG Impact: Detailing how seven firms engage in measuring and
reporting the ESG impact of their deals and portfolio companies for transparency and
assessment.

• ESG in Exit Strategies: Pointing out that ESG considerations are increasingly
influencing exit valuations and strategies, indicating a shift towards sustainable long-
term value.
How PE Firms are Incorporating ESG?

1.Formalizing ESG Commitments: Overview of ESG policy adoption among PE firms.

2.Integrating ESG in Investment Practices: Examination of how ESG considerations

are incorporated during investment sourcing and decision-making.

3.Operationalizing ESG in Portfolio Management: Discussion on managing portfolio

companies with a focus on ESG impact and preparing for ESG-influenced exits.