Impact of ESG Integration on Private Equity Fund Performance. Insights from UN PRI Signatories

Table of Contents

• 1 Introduction
• 2 Theoretical Foundation & Literature Review.
• 2.1 Introduction to Private Equity
• 2.1.1 Definition
• 2.1.2 Organizational Structure
• 2.1.3 Performance Measurements.
• 2.1.4 Historical Returns ..........\n
• 2.2 Sustainability in Finance
• 2.2.1 Definition & Sustainable Finance Concepts
• 2.2.2 ESG Investment Practice......
• 2.2.3 UN Principles of Responsible Investment
• 2.3 Sustainability in Private Equity.
• 2.3.1 Economic Legitimacy and Adoption
• 2.3.2 Motives & Strategic Drivers for ESG Integration...\n
• 2.4 Hypotheses.
• 3 Data & Methodology.
• 3.1 Data Collection & Selection Strategy
• 3.1.1 Fund-Specific Data.......
• 3.1.2 Sustainability Data
• 3.1.3 Limitations
• 3.2 Summary Statistics.
• 3.3 Methodology
• 3.3.1 Performance Effect of ESG Integration
• 3.3.2 Fund Size Interaction Effect...\n
• 3.3.3 Geography Interaction Effect ..........\n
• 4 Results...\n
• 4.1 Performance Effect of ESG Integration
• 4.2 Fund Size Interaction Effect....\n
• 4.3 Geography Interaction Effect..\n
• 5 Conclusion..\n

Objectives and Key Themes

This study aims to investigate the impact of integrating environmental, social, and governance (ESG) considerations into private equity fund performance. The study utilizes data on 3,127 private equity funds from the Preqin database and ESG information from the UN Principles of Responsible Investment directory to assess the association between fund performance and the general partner's signatory status to the UN Principles of Responsible Investment.

• The relationship between ESG integration and private equity fund performance.
• The effect of fund size on the relationship between ESG integration and fund performance.
• The impact of general partner location on the relationship between ESG integration and fund performance.
• The potential trade-off between ESG-compliant investments and financial returns.
• The implications for investors and fund managers regarding investment objectives and risk tolerance when considering ESG-compliant private equity funds.

Chapter Summaries

• Chapter 1: Introduction Provides an overview of the research topic and outlines the study's objectives and methodology.
• Chapter 2: Theoretical Foundation & Literature Review Explores the theoretical foundations of private equity, sustainability in finance, and the integration of ESG considerations within the private equity sector. This chapter reviews relevant literature and provides definitions, concepts, and frameworks related to the study.
• Chapter 3: Data & Methodology Discusses the data collection process and selection criteria, outlining the specific datasets used for the analysis. This chapter also details the methodological approaches employed to examine the relationship between ESG integration and fund performance, including interaction effects.
• Chapter 4: Results Presents the findings of the empirical analysis, examining the statistical significance of the relationship between ESG integration and fund performance, as well as the influence of fund size and general partner location.

Keywords

This study focuses on the intersection of private equity, ESG integration, and financial performance. Key concepts include sustainable investment, UN Principles of Responsible Investment, fund performance, and the potential trade-off between ethical investment and financial returns. This research explores the implications of incorporating ESG considerations into investment decision-making for both investors and fund managers.