How Private Equity Leverages ESG to generate value?

ESG reporting ramps up sustainability efforts

Maha Eltobgy, from Brightstar Capital, expounds on how Private Equity leverages ESG to generate value. Here, I glean two key insights from her insightful ruminations.

Private Equity conducts a contextual analysis of the industry to ascertain if its portfolio companies align with ESG objectives. In particular, they focus on the investee company's disclosure of energy efficiency plans and treatment of employees to determine this alignment.

Firstly, it's worth noting that many companies, prior to ESG disclosure, may have failed to recognize the significance of monitoring and evaluating energy consumption. This lack of awareness could be attributed to regarding energy consumption as a mere expense cost, without comprehending its environmental and social impact.

Secondly, Talent attraction concerns a company's capacity to lure and retain high-performing personnel. In today's fiercely competitive landscape, a company's workforce is a decisive determinant of its triumph. By providing optimal working conditions, benefits, and opportunities for professional growth, a company can entice and retain top talent, heighten employee morale, loyalty, and satisfaction, and consequently engender long-term value for the company.

Moreover, Turnover, a crucial indicator, mirrors a company's economic impact and contribution to society. The greater a company's turnover, the more extensive its contribution to society in terms of job creation, supporting supply chains, paying taxes, and other factors.

Thank you Marc Siegel for hosting the Think ESG webcast, which provided me with valuable insights into the private company and private equity perspective on ESG.

#esg # #energy #socialimpact #society #privateequity
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