There are several reasons for the momentum in responsible investment in private equity in recent years. First, Limited Partners (LPs) are asking General Partners (GPs) to integrate environmental, social and governance (ESG) issues. Second, due to regulatory changes, the economic downturn and public scrutiny, the industry is under pressure to demonstrate that it is a responsible member of society in order to gain access to capital markets. Third, there is a renewed focus on adding value to portfolio companies and ESG integration is a key way to do this.
Private equity is highly conducive to responsible investment because of its relatively long-term horizon; the typical holding period for an portfolio company is 3-7 years. In principal, private equity firms have influence over company management and are therefore able to promote ESG initiatives at the company level.
While there is momentum for responsible investment in private equity, LPs and GPs face a number of issues and challenges. How can LPs and GPs effectively engage with one another? How do you systematise ESG integration into the investment analysis and decision-making and ownership activities? What is the value of ESG integration?
About the work stream
The work stream was launched in 2008 with a handful of General Partners (GPs) and Fund of Funds (FoFs) and today is one of the PRI’s most mature, with over 130 GPs and FoFs and more than 130 Limited Partners (LPs) as members. The work stream brings together leaders and those new to the industry to collaborate, engage in debate and develop resources to support private equity investors wanting to implement responsible investment practices.
Get involved
Signatories can get involved in the Private Equity work stream by joining one or more of these working groups. Working groups undertake projects in several areas of interest, including the analysis of market practices and the development of implementation support tools. Currently, there are three active working groups:
- Private equity in emerging markets: the objective of this group is to improve signatories’ understanding of ESG-related risks and opportunities in emerging market investments.
- GP support: the objective of this working group is to develop interactive and practical tools to assist GPs in implementing the Principles.
- Exits research: the objective of this working group is to understand the value of incorporating ESG analysis into investment decisions.
Resources listed may require PRI signatory extranet access.
Publications
- ESG Disclosure Framework (March 2013)
- The integration of ESG issues in M&A transactions: Trade buyer survey results (January 2013)
- Responsible investment in private equity: A Guide for limited partners, 2nd edition (June 2011)
- Responsible Investment in Private Equity: Case Studies, 2nd edition (December 2009)
Webinars
- International guidance framework: responsible investment for general partners (December 2011)
- Private equity and corporate governance (August 2011)
- Climate change and private equity (May 2010)
- An overview of “RI in Private Equity: A Guide for Limited Partners” (January 2010)
- Investing in frontier markets
Events
- PEI PRI Responsible Investment in Private Equity conference (Amsterdam, October 5 2012)
Previous PRI in Person sessions
- Reporting on ESG in private equity (September 2011)
- Responsible investment in private equity (October 2010)
WORK STREAM MANAGER


