Pensions, private equity and public interest; ESG in any case
September 6, 2011
Pension funds are considering to reduce their investments in listed companies, see FD. Regulation on valuation, marking to market on a daily basis, makes life tough. Coverage ratios are under pressure immediately when stock prices go down. Pension funds are considering to increase investments in private equity fund. Should today’s announcement by Dutch Waterland, that over €1 bn was taken out of the market for a new fund, be considered in this perspective?
If and when the pension industry and the private equity sector are going to strengthen their ties, this will only emphasize the need for robust environmental social and governance (ESG) management. The stakeholders of pension funds will increasingly promote ESG as a means to strengthen the portfolios while contributing to society. As I have stated before: ESG is helpful in explaining what pensions are all about: both financial security and a world that is worth living in. More and more pension funds are getting the point, if only one step at a time.
I would advice private equity firms that hope to tap in on additional pension fund funding to accelerate building their ESG strategies. Research by our company shows that they are still long on intentions and short on progress. Pension funds do realize that while they may decrease stock market exposure, this will not mean that they can neglect public interest. Robust ESG management is the way to go.
For completeness sake: I just read in the FT that the Carlyle Group, a US based private equity fund, is preparing a USD 100m initial public offering of its common units by 2012.Previously I have elaborated on Carlyle’s ESG ambitions. There is still a lot to do, but they have started the journey.
What is the point I am making in this blog: both pension funds and private equity funds (either listed or non listed) need to have a robust ESG management system. For it helps to improve operational performance and public reputation. Can they afford to settle for less?
Share this article with :
Thanks so much for this. This is awesome post I ever seen on internet. This is rare to find that’s why difficult to understand. Anyway, you are definitely someone that has something to say that people need to hear. Keep up the good work. Keep on inspiring the people. For more information regards: Private Equity