ESG Goes Mainstream: How “Return First” PE Funds Can Factor ESG Considerations into Their Investment and Portfolio Management Strategies

Considering environmental, social, and governance (ESG) factors when making an investment is no longer solely the province of “impact-first” investors—those who prioritize social or environmental impact above return on capital—but has become, to one degree or another, the norm among private equity (PE) funds. As the calls from both investors and consumers for companies to integrate ESG considerations into their operations and rethink the way they have done business grow louder, funds are increasingly looking to respond to these concerns and integrate consideration of ESG factors into their investment and portfolio management strategies. This means that even “return-first” funds — those whose primary focus remains return on capital — are seeing advantages to considering ESG factors and synergies in connection with their own investment strategies.

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