ESG in Private Equity

ESG has rapidly become a key source of differentiation and value creation for private equity funds, with the potential to unlock lasting benefits. Funds at the forefront of the application of ESG in private equity see significant financial returns from their investments, including stronger sales, lower costs, higher employee engagement, and—ultimately—superior valuations.

Not all ESG factors are financially or socially relevant to every business. Our philosophy: It’s not about doing everything in ESG and private equity. It’s about doing the right things. And doing them well. BCG partners with funds to examine sustainability topics at each step in the investing journey, from formulating strategy to navigating regulations, and due diligence to portfolio value creation.

BCG is a leader in advancing sustainability agendas, with experience on more than 1,600 groundbreaking projects across all major industries and geographies. Our teams have helped clients decarbonize multi-billion-dollar supply chains, decommission oil rigs in the North Sea, and achieve factory-level circularity transformations. Our extensive sustainability experience across industries, together with our deep engagement in the private capital industry and our expertise in fully integrating ESG priorities, enables us to create value for clients in four primary areas:

• Fund Strategy and Operations. We help private equity funds define and operationalize their sustainability ambitions across the fund.  
• Sector Scans. We identify attractive investment opportunities in industries where megatrends in sustainability are reshaping profit pools.
• ESG Diligence. We include sharp perspectives on sustainability as a driver of value in each commercial diligence.  
• Portfolio Value Creation. We engage deeply in the portfolio, conducting portfolio scans to identify opportunities and leading sustainability transformations. 

BCG is at the forefront of supporting the private equity industry on sustainability topics:

• The ESG Data Convergence Initiative generates useful, performance-based, comparable ESG data for the private equity industry. 
• We are a partner to the Sustainable Markets Initiative, which enables the private sector to accelerate its transition to a sustainable future. 
• BCG’s CO2 FI solution allows investors to measure greenhouse gas emissions financed by their investments. 
• CO2 AI, with 130 million tons of Co2e under management, enables investors to measure, track, and reduce their portfolio’s environmental footprint.  
• BCG has a unique seat at the table with world leaders on climate and sustainability, serving as an exclusive consulting partner to COP 27, World Economic Forum’s Net Zero Challenge, World Wildlife Fund, Science Based Targets initiative (SBTi), and more.