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by GK Strategy 20th February, 2018
3 min read

What is ESG?

In recent years, ESG has become a key consideration for many private equity firms. At the latest Real Deals Mid-Market Conference, earlier this month, it was one of the main topics of discussion. But what is ESG?

ESG is a term that captures an investor approach to sustainability, analysing assets in terms of their Environmental, Social, and Governance performance, policies and processes, and the potential impact of related risks and opportunities on an asset’s financial performance and valuation. The relevant environmental factors considered can include a company’s approach and performance on waste, recycling, greenhouse gas and other emissions, and other forms of environmental impact.

Social factors are broader, encompassing human rights, economic impact, and relations with employees, suppliers, communities and governments. The governance component can often be the most relevant to investors as it covers a range of institutional issues that relate to all aspects of company performance, from board oversight and composition to risk management, audit, transparency and performance monitoring.

ESG analysis and management can be undertaken throughout the life cycle of an asset, from pre-purchase due diligence to ongoing performance management and then de-risking prior to sale.

For more information on how GK can help your business create and implement outstanding ESG and diversity practices, please contact martin@gkstrategy.com

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