Private funds warming up to responsible investment


Asharf Ammar (left), director at PwC Luxembourg discusses ESG for PE at PwC forum on 5 June 2018.Photo: Olivier Toussaint  

“How businesses operate has to transform to suit the needs of a changing world,” Ashraf Ammar, director at PwC Luxembourg said during a panel discussion on 5 June 2018. Discussing the impact of environmental, social and governance (ESG) factors in the private equity (PE) industry, he pointed out that ESG for PE is becoming more than just a trend or a nice-to-have strategy and that the majority of asset owners and investors are moving towards adopting ESG principles into their core processes.

The panel took place as part of the 21st Private Equity Forum organised by PwC Luxembourg where one of the main topics of discussion was whether the introduction of government regulations is necessary to raise ESG awareness among private funds.

Peter Veldman, of the Swedish firm EQT, said, “Inclusion of ESG principles is not something we do just because we are following a certain regulation, but because it’s good to be accountable.” He believes the industry is over-regulated and new laws don’t necessarily mean added value if their creation is just to “tick the right boxes”.

The regulatory aspect of ESG adoption has come to the forefront following the European Commission’s recent sustainable finance regulations that aim to increase both transparency in reporting and monitoring of investments.

Responding to Veldman’s comment, Sophie Beric of Idinvest Partners and Sachin Vankalas of the LuxFlag labelling agency said that the adoption of a new relevant regulation makes sense if its purpose is to incentivise sustainable businesses. Vankalas further added that talking about new regulations might be a little early given that ESG still needs to be properly defined for the PE industry.

What the participants and members of the audience--who were invited to share their opinion through an online poll--agreed upon was that the industry could indeed benefit from standards when it comes to responsible investment, one of the suggested ways being the labelling of funds that meet certain ESG requirements.