INSIGHT by ShareAction
ShareAction’s vision is a world where the financial system serves our planet and its people, and we are excited to announce the launch of a new research project examining stewardship in private equity.
Institutional investors participating in ShareAction’s research will have the opportunity to:
〉Contribute to the definition of a stretching standard of stewardship for the private equity industry and advance sustainable, responsible investment practices within the private equity landscape;
〉Help to identify the tools that are needed to start a dialogue on sustainable finance in private equity, and support the direction and priorities of our organisation’s responsible investment initiatives;
〉Access exclusive insights and analysis from the survey results.
| The case for action on Stewardship in Private Equity
Private equity’s shift from a niche activity to a critical component of the financial system is evident from investors’ financial commitment. As of June 30, 2022, total private markets assets under management (AuM) reached $11.7 trillion* and has grown at an annual rate of nearly 20 percent since 2017. Private equity investments now represent an increasing proportion of most institutional investor portfolios.
With the increase in AuM in private equity, there are undoubtedly emerging investor stewardship challenges and ESG risks. For instance, according to UNEP, private assets have become a significant source of CO2 emissions globally. Within 15 years, the estimated total share of global carbon emissions attributable to private equity investee companies grew from 2% to 7%.
Also, private equity is becoming increasingly important in the global economy – the number of portfolio firms under private equity management is reported to be double that of publicly listed firms. This trend is drawing the attention of stewardship managers.
It should also be noted that private equity firms tend to create returns for pension funds and endowments in industries where for-profit incentives could be easily misaligned with broader social goals in sectors such as healthcare, nursing home care, education, housing for vulnerable tenants or private prisons.
* McKinsey Global Private Markets Review 2023
| The project: what are the aims?
This project aims to understand the current private equity landscape via interviews with asset owners to learn from their stewardship experience in private equity and get a keen understanding of how they are thinking about responsible investment.
The individuals and organisations participating in the interviews will not be identified within the research study. Instead, the research will focus more on capturing patterns, themes, and trends based on the data collected.
How can Asset Owners participate in the research?
To participate in the research, please contact:
Karel Krticka
Investor Engagement Senior Manager – Private Equity
ShareAction
Runway East, 2 Whitechapel Road, London, E1 1EW, UK
E: [email protected]
| about
ShareAction is a NGO working globally to define the highest standards for responsible investment and drive change until these standards are adopted worldwide. We mobilise investors to take action to improve labour standards, tackle climate change and address pressing global health issues.
Over 15 years, ShareAction has used its powerful toolkit of research, corporate campaigns, policy advocacy and public mobilisation to drive responsibility into the heart of mainstream investment.
Our vision is a world where the financial system serves our planet and its people.
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
