ESG Transparency of Private Equity and Debt Firms

74 Pages Posted: 8 Dec 2022 Last revised: 26 Apr 2024

See all articles by Pascal Böni

Pascal Böni

Tilburg University; Tilburg School of Economics and Management

Jurian Hendrikse

Tilburg University

Philip Joos

Tilburg University; TIAS School for Business and Society

Date Written: April 24, 2024

Abstract

We study private equity and debt (“PE”) firms’ public ESG disclosures, which we find to be very low in the cross-section and to be decreasing monotonically from the PE firm- to the portfolio- and asset-levels of disclosure. We predict and find that PE firms’ ESG disclosures are explained by the composition and characteristics of PE firms’ investor base. The percentages of foundations, public pensions funds, private pension funds, as well as investors’ own ESG transparency and country-level social norms are all significantly positively associated with GPs’ ESG transparency. High transparency PE firms have 4.8% to 7% lower net IRRs when they hold above median ESG risks in their portfolios, when they are UNPRI signatories holding above median ESG portfolio risks, and when PE firms hold low impact potential assets in their portfolios. These findings suggest that underperforming PE firms use ESG disclosures to cater to investors’ preferences.

Keywords: ESG, Corporate Social Responsibility, Private Equity, Private Debt, Disclosure, Fund Performance, Limited Partners, Institutional Investors

JEL Classification: G15, G23, G24, M14, M41

Suggested Citation

Böni, Pascal and Hendrikse, Jurian and Joos, Philip, ESG Transparency of Private Equity and Debt Firms (April 24, 2024). Available at SSRN: https://ssrn.com/abstract=4289573 or http://dx.doi.org/10.2139/ssrn.4289573

Pascal Böni

Tilburg University ( email )

Warandelaan 2
TIAS Building
Tilburg, Noord-Brabant 5037 AB
Netherlands
+41793582813 (Phone)
5000 (Fax)

HOME PAGE: http://www.tilburguniversity.edu

Tilburg School of Economics and Management ( email )

Tilburg, 5000 LE
Netherlands

Jurian Hendrikse (Contact Author)

Tilburg University ( email )

School of Economics and Management
Warandelaan 2
Tilburg, DC Noord-Brabant 5000 LE
Netherlands

Philip Joos

Tilburg University ( email )

School of Economics and Management
Warandelaan 2
Tilburg, 5000 LE
Netherlands
31 13 4668716 (Phone)
31 13 4668001 (Fax)

HOME PAGE: http://https://www.tilburguniversity.edu/staff/philjoos

TIAS School for Business and Society ( email )

Warandelaan 2
TIAS Building
Tilburg, Noord Brabant 5037 AB
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
900
Abstract Views
2,578
Rank
49,999
PlumX Metrics