GLOBAL - LP demand for responsible investment rising

The report, produced by the UN-backed Priciples for Responsible Investing (PRI) initiative, also revealed that 86% of LPs would not only expect ESG information to be part of the annual reporting, but that they would also expect these issues to be integrated into capital calls or investment memos. All of the favourable respondents would expect to have the opportunity to discuss ESG matters with the GP.

The guide proposes a set of pre-investment and post-investment considerations. Pre-investment, LPs are encouraged to discuss the GPs approach to ESG when it comes to investments, their access to expert information and the ensuing disclosure on ESG-related practices. Engagement should then continue post-investment via regular monitoring of the implementation of the approach.

Alongside the guide several cases studies were also presented. Among these was that of Doughty Hanson-backed investment in Spanish transport provider Avanza, which is projected to achieve a 2.5-5% fuel reduction over the next two years, saving the company EUR 700,000 to EUR 1.4m a year.

Since November 2007 a joint partnership between the UN and LPs, GPs and industry associations has been working together to develop a set of non-prescriptive guidelines that has led to the PRI. 33 private equity firms on both sides of the Atlantic have signed up to the proposals, though it remains to be seen if the initiative can prevent highly prescriptive international legislation being brought in to cover private equity.

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