Sustainability Value Creation

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In late 2024, the PRI, together with Bain & Company and NYU Stern Centre for Sustainable Business embarked on one of the largest projects on value creation through sustainability to date globally. Over 400 investors were engaged through a world-wide survey, a series of one-to-one interviews, and regional workshops across Africa, Asia, Europe, and Latin and North America. The output: The Sustainability Value Creation (SVC) framework – a holistic approach for driving financial value through sustainability [PDF]. 

This forms Phase I of a multi-year, multi-phase project. In Phase II, we intend to develop methodologies and playbooks to quantify financial impact from sustainability initiatives for specific industries. In Phase III, we intend to quantitatively assess the contribution of identified sustainability initiatives to real-world liquidity events. Phase II has now launched.

To hear more about our work or get involved in Phase II and beyond, please contact us.

Executive summary

Value creation through sustainability can occur at both the investment firm and portfolio company level. Sustainability can unlock financial value across multiple drivers. Embedding sustainability practices across the investment value chain and lifecycle is critical to maximising this value. Organisational enablers and specific capabilities are also required.

This guide and supplementary resources provide an extensive overview to support value creation through sustainability in private markets.

The business case for sustainability

Sustainability can drive financial returns, build resilience, and position for success. Additionally, investors anticipate sustainability will deliver an even greater positive impact on financial results in future. Integrating relevant drivers and initiatives into portfolio company business strategy is key. To do this, investors and portfolio companies must be able to link value creation through sustainability to financial outcomes and secure stakeholder buy-in.

Sustainability unlocks value for portfolio companies across multiple drivers, with better customer value proposition and enhanced customer trust seen as key drivers.

Practical approaches to sustainability integration

The Sustainability Value Creation (SVC) framework – a holistic approach for driving financial value through sustainability

1. Investment firm-level activities
   
   At the investment firm level, approach to sustainability differs based on firm size, industry focus, geography, and asset class. Ensuring sustainability strategy is aligned with broader ambition and objectives, as well as embedding sustainability practices across the investment lifecycle, helps to drive maximum value.
   
   
2. Portfolio company-specific value creation approach
   
   At the portfolio company level, approach to sustainability is largely specific to sector and business, though a set of core topics tend to drive value across industries. To maximise value potential, portfolio companies should identify material sustainability topics and focus on key corresponding initiatives that drive financial outcomes.
   
   
3. Organisational enablers
   
   Achieving value creation through sustainability requires key organisational enablers at both the investment firm and portfolio company level. These include leadership and deal-team commitment, robust data collection, and tracking of sustainability and financial metrics.

Download the full guide, Sustainability Value Creation [PDF], to access our holistic framework designed to help investors use sustainability to drive financial outcomes.

To hear more about our work or get involved in Phase II and beyond, please contact us.