Private equity firms shouldn’t ignore companies with poor environmental, social and governance records when seeking sustainable investments, a panel of dealmakers told the World Economic Forum in Davos.
(Bloomberg) — Private equity firms shouldn’t ignore companies with poor environmental, social and governance records when seeking sustainable investments, a panel of dealmakers told the World Economic Forum in Davos.
Rob Lucas, managing partner at €137 billion ($148 billion) private equity firm CVC Capital Partners, said Tuesday there was always a question about whether to walk away from ESG laggards or help them improve their credentials.
“We should not be afraid to invest in and then really set about creating change within business,” he said. “We have not just the responsibility, we have the ability to make great change.”
Vindi Banga, a partner at Clayton Dubilier & Rice, said companies don’t “go overnight from black to green” and private equity owners need to be targeted in their approach to improving ESG.
“You certainly will not be able to do everything,” the former Unilever Plc executive said. “Be very choiceful about the things that are really going to move the needle.”
Private equity firms have for years come under pressure from pension fund backers to invest their money in a way that will have social impact as well as deliver returns. Suyi Kim, senior managing director and global head of private equity at CPP Investments, said on the panel that the ground for “knitting the profit and the purpose” is growing.
“I would really encourage all the investors to look at that ground,” she said.
(Adds CVC’s assets under management in second paragraph. An earlier version of this story corrected Suyi Kim’s full job title in the penultimate paragraph.)
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