ESG 'crucial' to many private equity-funded companies – OFI

GLOBAL – Small and mid-cap companies funded by European private equity are keen to integrate environmental, social and governance (ESG) issues, according to a survey by OFI Asset Management.

It found that human capital was a key factor for long-term investment, and that companies seemed determined to tackle environmental challenges immediately, even in the absence of regulatory constraints.

In addition, corporate social responsibility (CSR) was viewed as a key issue for companies of all sizes.

On the social side, permanent contracts, staff training and a low turnover rate were key issues for financial investors.

The survey also found that French companies were more sensitive to their environmental impact than their European peers, as 17% of French companies have carried out a carbon-footprint assessment over the last five years, compared with less than 10% for Europe as a whole.

By way of comparison, almost every listed European company has carried out a carbon-footprint assessment due to regulatory pressure.

But carbon-footprint assessments do not depend on the size of the company, as 40% of companies that have carried them out over the last five years are worth between €150m and €250m, while a quarter of them are valued at less than €50m.

On the governance side, gender equality at the executive level is a key issue for any modern growth strategy, according to the survey.

It revealed that the larger the company, the fewer women were to be found in senior management roles.

Within young companies, on average, women fill half of senior roles because they tend to access senior management jobs more easily in companies they co-founded, or in smaller-sized companies where it can be easier for individuals to stand out.

The survey also found that close to 20% of companies had published CSR reports in 2012, with 30% of companies valued at less than €50m producing a CSR report in 2012.

By comparison, all listed companies within the STOXX Europe 600 index published CSR reports to comply with regulatory constraints.

The survey, published by OFI Asset Management’s Private Equity multi-management team in partnership with the Magazine des Affaires, covered around 60 private equity firms and 100 funds, including more than 300 European companies.