Five Essential ESG Articles for Private Fund Managers
William V. de Cordova
Private Equity Law Report
It seems like most types of actors in the private funds industry have sought to fill the vacuum of authority and certainty that currently exists as to environmental, social and governance (ESG) issues. Institutional investors eager to “do well by doing good” are allocating massive sums of money to funds with ESG strategies, while demanding detailed ESG performance reporting and accountability in connection therewith. Fund managers, in the meantime, are rushing to develop ESG strategies and to launch funds quickly enough to take advantage of that investor demand, while simultaneously developing compliance protocols. On the regulatory front, the E.U. and, to a lesser extent, the U.K. are leading the efforts, with local managers scrambling to comply with the far-reaching Sustainable Finance Disclosure Regulations and other edicts. Conversely, the SEC steadfastly refuses to issue prescriptive ESG regulations amid internal discord – both public and private – between SEC Chair Gary Gensler and the other Commissioners as to how to address the burgeoning area. The above are merely some of the countervailing considerations that PE sponsors and investors must wade through to successfully pursue their ESG objectives. To preview those issues, and in honor of Labor Day in the United States, this issue of the Private Equity Law Report highlights five ESG-related articles from its historical archives that provide guidance of particular relevance to fund managers. Next week (the week starting September 13, 2021), the Private Equity Law Report will resume its normal weekly publication.