Applying 'Deep ESG' to Asian Private Equity

25 Pages Posted: 21 Apr 2020 Last revised: 18 Dec 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 ESG implementation and sustainability aspirations in Asian private equity. Private equity, like major public market and debt investors such as Blackrock, has adopted language that suggests a proactive approach to ESG management. However, process-oriented ESG compliance presently far outstrips evidence of tangible contributions to ESG objectives and outcomes. This article describes a taxonomy of common approaches to ESG investment practices in Asian private equity and discusses their shortcomings. It then presents ‘Deep ESG’ as an alternative approach that operationalises ESG and sustainability metrics more holistically than existing frameworks. The Deep ESG framework enables a higher level of market-led intentionality that better informs institutional investors, regulators, communities, and employees as they evaluate private equity's ‘balance sheet’ of ESG outcomes. By investing in tools for goal setting, measurement and evaluation and applying them consistently across all target and portfolio companies, private equity managers can pivot away from a defensive approach by working with stakeholders to shape constructive solutions to 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, Applying 'Deep ESG' to 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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