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:
An unprecedented effort by private equity firms offers data-driven insights into the progress private companies are making against their ESG goals.
Institutional investors were late to realize the alpha potential of clean tech and other environmental investments. They should avoid making the same mistake with social impact.
The industry holds clear advantages for making the businesses it invests in more environmentally and socially sustainable. Interviews with leading players point to five priorities.
Private equity is well placed to lead the way in capturing value through sustainability. Interviews with more than 30 leading industry experts suggest five steps that investors can take right away.
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:
Managing Director & Partner
Toronto
Partner & Associate Director
Boston
Partner and Director
London
Partner & Director, Sustainable Investing & Social Impact
Toronto
Managing Director & Partner
Hamburg
Partner and Associate Director
Vienna
