The private equity industry believes responsible investment is “here to stay”, with a recent event in Brussels championing the case for taking long-term non-financial factors into account.
The 2014 Responsible Investment Summit, hosted by the Brussels-based European Private Equity and Venture Capital Association (EVCA) in January, brought together thought leaders, investors and policymakers to discuss the policy issues around responsible investment.
Among the speakers were Wolf Klinz, a German MEP described as the “driving force” behind the European parliament’s position on long-term investment, and Yves Leterme, the former Belgian prime minister who is now number two at the Organisation for Economic Co-operation and Development (OECD).
Michael Collins, public affairs director at the EVCA, felt that delegates were positive about the contribution private equity can play in encouraging a shift towards responsible investment.
“While it is not the answer to all of Europe’s investment needs, it is nevertheless a significant potential player and one that should be encouraged”, he added.
Private equity is an asset class consisting of equity securities and debt in companies that are not publicly traded on a stock exchange. Typically, private equity investment is made by a private equity firm, a venture capital firm or an angel investor.
Collins said that the idea of investing for the long-term was “absolutely hard-wired” into the way private equity functions. Because of the lifespan of the average fund, investors commit to lock their money up for around 10 years. Meanwhile, most portfolio company investments are held for around five years.
“If you think about what private equity is really doing, it’s building companies that will prosper well beyond the period of private equity ownership. It’s building companies that will thrive when the next owner takes control”, he explained.
“The private equity model only works if you’ve built a company that is sustainable and that people would want to invest in. That concept of investing for the long-term and building something for the long-term is right at the heart of what private equity does.”
While the EVCA is keen to note that long-term investment and responsible investment are not necessarily synonymous, it said increased investor interest in environmental, social and governance (ESG) factors meant the concept is on an “upward trend”.
At the Responsible Investment Summit, there were also sessions on tax issues at an EU level, covering things like the Financial Transaction Tax. Delegates heard from speakers such as Heinz Zourek, EU director-general for tax policy, and Sony Kapoor from the thinktank Re-Define.
As for the future of responsible investment, Collins said attendees of the event were keen to emphasise there was no trade-off between investing responsibly and getting decent returns.
He added, “Even more than that, it’s perhaps getting to the stage where investing in companies that have a business model that is sustainable is actually going to be key to their long-term financial health. It’s not just a cost, but actually a driver of performance.
“As we get that greater convergence between the right thing to do from an ESG perspective and the financially rewarding thing to do, we’re only going to see responsible investing grow in significance.”
Like our Facebook Page
Can You Maximize Your Profits While Investing Ethically?
Environmental Benefits of Living in Miami. Why Is It Worth Moving There?
5 Ways To Shift To Green Energy At Home
Advantages of Free-Range Farming for Eco-Friendly Consumers
What is Eco-Friendly Investing and How Can You Embrace It?
Green Software Ideas to Implement with an Offshore Development Team
5 Things Eco-Conscious Consumers Should Know About Private Wells
The True Environmental and Social Costs of Mined Diamonds
20 Incredible Facts Eco-Tourists Should Know About Dubai
5 Massive Benefits of Turning to Renewable Energy
6 Tips For Getting the Most from a Solar-Powered Home
7 Excellent Ways to Live a Greener Lifestyle in 2021
How the Property Industry Is Embracing Eco-Friendliness Across the Board
Sustainability in Construction: Methods to Mitigate Environmental Impacts
New Company is Driving ESG Infrastructure Development in Mining
10 Tips to Turn Your Next Holiday into an Eco-Friendly Celebration
4 Benefits of Commuting with a Bicycle as an Eco-Friendly Consumer
Some Important Facts about Eco-Friendly Glass Railings
Impact Proof of Stake Ethereum Mining on Power Industry Sustainability
7 Business Survival Guidelines All Eco-Friendly Entrepreneurs Must Follow
- Features12 months ago
Eco-Friendly Interior Design Is Easier Than You Might Think
- Features10 months ago
Eco-Friendly Hacks To Create A Durable Shop For Your Home
- Energy6 months ago
Eco-Friendly Homeowners Lower Carbon Footprints through Greater Air Conditioner Efficiency
- Features5 months ago
Seven Health and Safety Tips for Eco-Friendly Products in a Green Home