Private Equity (PE) Funds have not historically been known to distinguish between investment opportunities’ moral or social imperatives. But now the trend is changing. One of the major reasons for this shift is being driven by clients themselves who are focusing on increased ESG (environmental, social, governance) factors. A lot of LPs (Limited Partners) in particular have been pushing for such ESG awareness. A business research assignment was launched by INSEAD’s GPEI (Global Private Equity Initiative) to gauge the impact on the entire ecosystem. There is a five-point framework in the entire ecosystem of PE investment. On the one extreme end is the PE shareholder model focused on maximizing financial returns, and the other side is venture philanthropy aimed at social returns. In between the wedges exist Negative Screening, Proactive ESG Management and Impact Investing. Impact Investment has now emerged as a mainstream, away from the fringes. TPG, Bain Capital and KKR are examples of such funding. The LPs are generated from a diverse set of funds such as Sovereign Wealth Funds, High-Net Individuals and pension funds. The millennial generation is especially interested in the environmental aspects. Measuring the overall impact of these impact investments is a challenge, which is why PG LIFE has come up with up to five important tangible metrics.

Source:https://knowledge.insead.edu/blog/insead-blog/impact-investing-comes-into-its-own-8956

Uploaded Date: 05 June 2018