Using ESG Data to Generate Alpha in Private Equity and the Financial Performance of Impact Investing Through Private Debt

ESG initiative implementations and ESG reporting are fast-growing trends in private equity. The demand for gathering real data on ESG initiatives in PE portfolio companies is growing stronger within the global limited partner base. Historically, this demand has been larger in Europe than in the US, but we’re starting to see real growth and adoption in the US markets.

“[ESG] has advanced more quickly in Europe than in the US. The Europeans have made it a greater priority in terms of hearing from their GP’s and portfolio companies about ESG policies,” Emily Mendell of ILPA explains, “In the US, we are moving in that direction as well. When you look at the type of information LP’s are requesting, 5-8 years ago there were hardly any ESG-related questions in DDQs. Now, most LP’s have significant sections on ESG policies and how fund managers monitor ESG at portfolio companies”

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