Think Global, Invest Responsible: Why the Private Equity Industry Goes Green

Abstract

The growth of socially responsible investment on public financial markets has drawn considerable academic attention over the last decade. Discarding from previous literature, this paper sets up to analyze the Private Equity channel, which is shown to have the potentiality to foster sustainable practices in unlisted companies. The fast integration of the Environmental, Social and Governance issues by mainstream Private Equity investors is unveiled and appears to have benefited from the maturation of socially responsible investment on public financial markets and the impetus of large conventional actors. Hypothesis on the characteristics and drivers of this movement are proposed and tested on a unique database covering the French Private Equity industry in 2011. Empirical findings support that Private Equity responsible investing is characterized by shareholder activism and strategically driven by a need for new value creation sources, increased risk management and differentiation. In particular, results show that independent funds, which need to attract investors, are more likely than captive funds to develop responsible practices. Evolution of the movement and future research paths are proposed.

Board gender diversity and transparency of environmental, social and governance disclosure: Evidence from Malaysia

“…The disclosure scores measure the transparency of the firm, not its performance, and it ranges from 1 to 100 such that a higher score indicates Atan, Razali, Said, and Zainun (2016), the Malaysian law requires company directors to be responsible for ensuring that good governance structure is in place to protect the shareholders. Good governance is also found to have the largest impact on investor's decision-making process (Crifo & Forget, 2013) and hence the emphasis on governance disclosure.…”

Ingredients Matter: How the Human Capital of Philanthropic and Traditional Venture Capital Differs

“…Socially responsible private equity includes leveraged buy-outs and TVC (Crifo and Forget, 2013). It seeks to make investments in private companies that maximize economic returns and have positive social and/or environmental effects.…”

Do Corporate Social Performance Targets in Executive Compensation Contribute to Corporate Social Performance?

“…Investor activism has an effect on broader corporate outcomes and stakeholder issues, such as the firm's environmental impact (Lee and Lounsbury 2011;Reid and Toffel 2009) and its corporate social performance (CSP) (David et al 2007;Rehbein et al 2004). Investors may raise both financial as well as social issues (O'Rourke 2003), reflecting their concern for the triple bottom line of economic, social, and environmental performance (Crifo and Forget 2013;Goranova and Ryan 2014).…”