"Responsible private equity investing involves more than providing a few ESG reporting metrics."

The Road to Responsible Private Equity, a newly published whitepaper co-authored by Tensie Whelan and Chander Balakumar, CAIA features a robust academic review of the state of private equity, its potential for value creation versus extraction, and a responsible investing framework to leverage capital for the betterment of businesses and communities.

In an introduction featured in ImpactAlpha, CSB Director Tensie Whelan, shares some key elements:
✔ Good governance. Diverse and ESG credentialed board members and investment managers

♻ Sustainability integration. An investment policy and execution that integrates sustainability risks and opportunities

💲 Financial transparency. Fund management that avoids manipulation of financial reporting (e.g. misuse of subscription lines of credit, public market equivalence valuations, and fund fees) or over-leveraging of portfolio companies

📈 Sustainable Life-Cycle. A life-cycle approach that values the long term and invests in sustainability to improve market valuation and ensure a responsible exit (e.g. the buyer will continue the sustainability focus).

📋 Operational excellence. Supporting portfolio company uptake of sustainability by assisting with materiality and stakeholder analyses and the development of an embedded sustainability strategy, together with key performance indicators (KPIs), compensation metrics and capital allocation mechanisms that support sustainability transformation.

📊 Accountability for performance. Creating robust material ESG KPIs along with ROSI (Return on Sustainability Investment™) KPIs that track the financial returns associated with sustainability investments. Mapping the ESG indicators to global reporting standards such as International Sustainability Standards Board (ISSB), Global Reporting Initiative (GRI), and the Task Force on Climate-Related Financial Disclosures (TCFD) with third-party auditing where appropriate. (Reporting and disclosure metrics are process- and output-based and do not drive improved performance, which is why strategy-linked KPIs are needed)

Read the full piece in ImpactAlpha
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Read the full whitepaper