By Roy Snell:
I Forgot to Mention Private Equity’s Interest in ESG
The PE folks are telling us ESG adds value to an organization.
I wrote a list of the most likely reasons your leadership might support your Environmental, Social and Governance Program and posted on Osprey’s Soul of ESG Blog last week. This week I was talking to Steve Alienello from Osprey and he reminded me that many of the Private Equity folks are now asking about your ESG program while doing their Due Diligence.
Leaving the PE guys ESG interest off of the list is like forgetting to mention wheels… when compiling a list of things a car needs to function properly. The BIG takeaway for me here is the fact that the 12 reasons one might support an ESG program was already a very strong list. All you need to see is about 3-4 of them to think that ESG is going to be big… and there is 12. And on top of all that I forgot a huge one… our PE friends. I would not be the least bit surprised if you were able to identify another reason for leaderships support of ESG that I missed. They just keep coming. The PE folks are going to force every company that is seeking that kind of funding to strongly consider implementing an ESG program. But that’s not all.
Every time leadership of any organization sees something like this (PE supporting ESG) they are going to think more positively about ESG… well most of them will. And that is because they respect the PE folks. The PE folks are telling us ESG adds value to an organization. We all want to add value, even if we think we will never go after PE funding.
These “ESG Growth Tipping Points” are everywhere. There are far more ESG tipping points now than there were for compliance programs back in the 1990s and compliance became an international phenomenon. I have said that I think ESG will be bigger than compliance. By that I mean the average budget for ESG will be higher than compliance, there will be more staff, a better seat at the table, more support from leadership, more public support, more enforcement, etc. And that is because, everywhere I turn, there is another indicator that ESG is very important in the eyes of many important people. This is a great time to get involved in ESG. The growth will be significant and people who get involved early will benefit significantly from the growth.
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