| Abstract [eng] |
In the last few years, European Union has introduced Sustainable Finance Disclosure Regulation and EU Taxonomy which increased the pressure for PE firms to incorporate ESG factors in their investments. Since the respective topic is quite new, the ESG implementation is not fully analysed in terms of PE firms. McKinsey (2019) stated that out of more than 2,000 studies, 63% studies found a positive impact on value creation, for instance higher equity returns, better management of downside risk, higher credit rating. And only 8% of studies had negative findings of ESG impact on equity returns. According to EY global private equity leaders, ESG issues are going to impact all industry sectors over the next 10 years, thus it shows that ESG topic is not only relevant now, but it is going to be relevant for the next decade as well whereas currently only limited number of academic papers analyses ESG topic from PE perspective. Therefore, the aim of this paper was to review the ESG incorporation in European PE firms based on several different criteria and concentrating mainly on the firms which are UNPRI signatories. The interview and case study research methods severely limit the number of firms reviewed and analysed, and such analysis usually does not provide a complete picture of ESG incorporation in a given region. The research of this work might be divided into two parts. The first section of the report scrutinizes 149 PE firms that joined the UNPRI initiative to identify characteristics of PE firms that have embraced ESG policies. The second part of the research explored the link between being a member of UNPRI and better financial performance and better investor’s risk management through regression analysis. |
