Private equity is becoming a powerful change agent for driving progress on ESG, climate, and sustainability. BCG helps private equity funds and principal investors create outsized value by integrating sustainability considerations at each stage of the investment life cycle.
ESG has rapidly become a key source of differentiation and value creation for private equity funds, with the potential to unlock lasting benefits. Funds at the forefront of the application of ESG in private equity see significant financial returns from their investments, including stronger sales, lower costs, higher employee engagement, and—ultimately—superior valuations.
Not all ESG factors are financially or socially relevant to every business. Our philosophy: It’s not about doing everything in ESG and private equity. It’s about doing the right things. And doing them well. BCG partners with funds to examine sustainability topics at each step in the investing journey, from formulating strategy to navigating regulations, and due diligence to portfolio value creation.
BCG is a leader in advancing sustainability agendas, with experience on more than 1,600 groundbreaking projects across all major industries and geographies. Our teams have helped clients decarbonize multi-billion-dollar supply chains, decommission oil rigs in the North Sea, and achieve factory-level circularity transformations. Our extensive sustainability experience across industries, together with our deep engagement in the private capital industry and our expertise in fully integrating ESG priorities, enables us to create value for clients in four primary areas:
A waste management company sought to drive growth through ESG. In six weeks, our team analyzed ESG trends affecting the waste management space and identified six priority initiatives. The company is on track to achieve a 30% increase in enterprise value (from £270 million to £350 million), generating value from electric vehicle battery processing, tire and waste plastic pyrolysis, and green steel.
The Xella Group—a leading manufacturer and supplier of building and insulation materials—sought to develop a robust ESG strategy that would reduce costs, improve profitability, and establish its reputation as an ESG leader. In ten weeks, BCG helped the company update its ESG strategy and develop ambitious targets. Xella's expanded EBITDA margins are on track for a payback period of less than 3 years.
BCG is at the forefront of supporting the private equity industry on sustainability topics:
BCG Named a 2023 Global ESG & Sustainability Strategy Consulting Leader
IDC MarketScape evaluated 16 consulting firms, recognizing BCG for its strengths in CO2e mitigation, climate risk, materiality assessments, a growing social pillar platform, and a strong partner ecosystem.
The ESG Data Convergence Initiative (EDCI) is a first of its kind, industry-led effort by the private equity community to drive convergence of meaningful ESG metrics, and generate comparable, performance-based ESG data. BCG has supported the EDCI since its inception since 2021, and now our firm has taken on the role of the initiative’s long-term benchmarking and advisory partner.
BCG’s Vinay Shandal discusses the importance of ESG data and our partnership with the ESG Data Convergence Initiative (EDCI) along with the impact of ESG metrics for the private equity sector.
Private equity experts discuss the progress the EDCI has made in the industry to improve both the volume and the quality of ESG data—which in turn, better positions the industry to help its clients.
To help the world reach net zero, investors need a clear and pragmatic way to gauge the carbon impact of the solutions they fund.
More than 70% of leaders in private markets have high or very high expectations that they will earn a premium for a portfolio company that prioritizes decarbonization.
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An unprecedented effort by private equity firms offers data-driven insights into the progress private companies are making against their ESG goals.
BCG’s private equity consultants have deep expertise at the intersection of ESG and private equity. Here are some of our experts on the topic:
Partner and Associate Director
Vienna
