Satisfying

Stakeholders
Why PE firms are embracing ESG?
• Risk Management
• Reputational Risk
• Investment Risk

• Satisfying Stakeholders
• Pressure from LPs
• Responsibility as Signatories

• Generating Value
• Higher Returns
• Higher Valuation at Exit
• Lower Operational Costs
• Lower Cost of Capital
• Competitive Advantage
Pressure from LPs
• LPs Drive ESG Prioritization: Institutional investors require
robust ESG practices as a precondition for funding,
according to David Rubinstein of Carlyle.

• ESG: A Fundamental Requirement: Major PE firms now

view ESG integration not as an option but as an essential
criterion set by Limited Partners.

• Influence of European Pensions: European pension funds

are particularly proactive in mandating ESG adoption,
wielding significant influence over General Partners'
strategies.
Pressure from LPs: Evolving Nature of Inquiries
• Broadening ESG Scope: Investors now expect PE firms to demonstrate concrete
actions in areas such as diversity and inclusion, beyond traditional "vice" industry
exclusions.

• Demand for Transparency: LPs are increasingly requesting detailed ESG reporting,
marking a shift from mere consideration to active disclosure and accountability.

• Due Diligence Specificity: Asset owners are probing the specifics of ESG
commitments, including public or private pledges, and the internal structure
supporting ESG integration within PE firms.
Pressure from LPs: Examples
Responsibility as Signatories
• UN Principles for Responsible Investment: Major PE firms
commit to integrating ESG into their investment practices
as signatories of the UNPRI.

• Adherence to Industry Guidelines: Firms align with the

American Investment Council's Guidelines for Responsible
Investing, reflecting a sector-specific commitment to ESG.

• B Corporation Certification: TowerBrook Capital Partners

sets a precedent as the first mainstream PE firm to
become a certified B Corporation, embracing a
sustainable and inclusive economy.

• Public Accountability: Public commitments to ESG

principles and certifications put PE firms under scrutiny,
motivating them to act consistently with their pledges.
Responsibility as Signatories: Examples