Responsibility in private equity investing
Date: August 20, 2010
Private fund managers are accustomed to addressing traditional social responsibility concerns of investors focused on avoiding investments in “sin” industries (such as alcohol, tobacco, gambling and firearms) or “bad actor” countries (such as Cuba, Iran and Sudan). Recently, however, the focus of many investors is shifting beyond negative restrictions on investment to the integration of environmental, social and corporate governance (“ESG”) considerations into investment activities. Although many fund managers have often taken certain ESG considerations into consideration when evaluating investment risk, as more pension plans and other institutional investors increasingly incorporate ESG principles as core components of their business practices (including as criteria for fund manager selection), managers are facing increasing pressure from investors to include ESG considerations as primary considerations in their investment decision-making rather than as isolated risk management or ethical considerations.
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Source: Lexology
