Private equity: Identifying the most important value drivers with ESG scorecards

ESG has become a strategic success and investment factor for private equity companies. Key figures are essential in the planning and implementation of sustainability strategies in order to be able to act in a targeted manner. Our standardised ESG scorecard approach now enables private equity investors to focus on the key value drivers when managing their portfolios. The scorecard is based on expert interviews, internal and external surveys, sustainability reports and regulatory requirements.

In the white paper "Maximising Value and Impact: Unleashing the Potential of ESG in Private Equity Portfolios with an ESG Scorecard", you can find out which KPIs are included in our scorecard and why they are of general importance. Depending on the diversity of the portfolio, sector-specific indicators can also be added to the core scorecard.

One thing is clear: the number of ESG regulations is increasing - and they affect every company in every sector. Many European directives and regulations are still being adapted and best practices have yet to be developed. Company management is faced with new tasks.

Meanwhile, many private equity companies still lack an overview of the ESG KPIs that must or can be reported. A recent KPMG study on ESG management and control showed that only 56 per cent of the companies surveyed have introduced suitable and well-defined KPIs for the management of environmental aspects. KPIs for social or governance aspects are even less widespread. There is therefore a lot of catching up to do.

Private equity funds are no longer orientating themselves less towards benchmarks in their search for best practices, but are opting for ESG approaches they have developed themselves. A common benchmark is both useful and necessary. Collecting ESG data is not only necessary for compliance reasons, but also to establish yourself as a preferred provider and investor at portfolio and fund level. For example, a portfolio company that operates sustainably and ethically can have a competitive advantage and be sold at a premium. Our experts explain further background and details in the white paper.