'Deep ESG': A Holistic Validation Methodology for Asian Private Equity

15 Pages Posted: 21 Apr 2020 Last revised: 21 May 2020

See all articles by Frederick J. Long

Frederick J. Long

Olympus Capital Asia, Hong Kong

Syren Johnstone

Faculty of Law, University of Hong Kong; Asian Institute of International Financial Law

Date Written: February 12, 2020

Abstract

At this stage of Asia’s development there is a need, and an opportunity, to establish a validation methodology that better gauges levels of ESG implementation and sustainability aspirations in Asian private equity. International investors wanting radical improvement, and local private equity investors and stakeholders typically not holding similar expectations, have broadly led to the adoption of stopgap solutions that are a nod to ESG and sustainability concerns. A taxonomy of common approaches to ESG investment practices in Asian private equity is presented and their shortcomings described.

This article proposes “Deep ESG” as a holistic methodological framework that better operationalizes ESG and sustainability metrics in the context of Asian private equity investment practices in toto. The framework requires the private equity firm to establish the pre-deal and post-execution parameters on which it seeks an ESG investment to be assessed. The rigor of the framework so established will inform and guide the confidence level a stakeholder is willing to assign to the ESG and sustainability merit of an investment. Deep ESG has the potential to drive capital allocation in a more ambitious and commercially compelling direction to solve urgent sustainability goals.

Keywords: Private Equity, Asia, ESG, Environmental, Social, Governance, SDG, Sustainable Development Goals, Deep ESG, Sustainable Investment, Impact Investment, Sustainability

Suggested Citation

Long, Frederick J. and Johnstone, Syren, 'Deep ESG': A Holistic Validation Methodology for Asian Private Equity (February 12, 2020). University of Hong Kong Faculty of Law Research Paper No. 2020/021. Available at SSRN: https://ssrn.com/abstract=3562096 or http://dx.doi.org/10.2139/ssrn.3562096

Frederick J. Long

Olympus Capital Asia, Hong Kong ( email )

Hong Kong
Hong Kong

Syren Johnstone (Contact Author)

Faculty of Law, University of Hong Kong ( email )

Faculty of Law, Pokfulam Road
Pokfulam
Hong Kong
Hong Kong

HOME PAGE: http://www.law.hku.hk/academic_staff/syren-johnstone/

Asian Institute of International Financial Law ( email )

Faculty of Law, Pokfulam Road
Pokfulam
Hong Kong
Hong Kong

HOME PAGE: http://www.law.hku.hk/academic_staff/syren-johnstone/

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