Private equity companies are fighting the good fight by investing in environmental, social, and governance (ESG) opportunities. These are investments that both turn a profit for the good of a company while promoting the health of the world and its inhabitants. Now, more and more companies are pushing to make these kinds of investments a core part of their business’s mission, and some companies have already accomplished a lot through their ESG investments.
One of those companies is New York-based private equity firm KKR, which has already invested close to $5 billion globally toward environmental and social causes. “ESG is core to our business processes, not a sidecar,” says KKR Global Head of Public Affairs Ken Mehlman. A leader both in the finance and the sustainability industries, KKR has invested in food safety and clean water missions in China, ensuring that citizens are receiving safe and healthy foods. The company’s ESG portfolio is already robust and continues to grow through new partnerships. Mehlman predicts that digital security will be KKR’s next big investment.
Like KKR, Doughty Hanson has been active in ESG investments for several years. The firm, based in London, was one of the very first to announce a report focused solely on their ESG investments after partnering with the World Wildlife Fund in 2011. The company also seeks to make ethical investments a primary component of its operations with the intent to enhance value, elevate the brand, and reduce the risks created by poor governance.
Over the last ten years, ESG investing has become an increasingly important trend in private equity and elsewhere. Investing in socially responsible causes grew a whopping 929 percent between 1995 and 2014. Just between 2012 and 2014, global assets rose from $13.3 trillion to $21.4 trillion because of ESG investments. It’s likely that ESG will pick up among other industries and more companies will begin working for a better future through their investments.
Learning to engage with a generation that is younger and especially interested in charitable efforts is perhaps the best—and arguably only—way for businesses to adapt and do better. ESG opportunities are good for everyone, businesses and communities alike.
