Despite Donald Trump’s climate change skepticism and deregulation promises, one of our major predictions for 2017 is that mid-market private fund managers are going to have to pay much more attention to environmental, social and corporate governance (ESG) issues.
Let me explain why. For one, ESG is a trend with a ton of inertia behind it. These types of things tend to start at the top of the market, where resources and specialists are in plentiful supply, and work their way down. KKR for instance publishes a detailed ESG report annually, and has a section on its website dedicated to responsible investment. You would be hard pressed to find anything similar at a firm managing south of $1 billion, but it’s becoming a point of conversation in mid-market circles. In fact, a new PwC study found that more than two-thirds (70 percent) of managers have now made a public commitment to investing responsibly. In 2013, the comparative figure was 57 percent. But elevating responsible investment from a do-good side show into a core element of your firm culture means putting action behind those words.