Does private equity promote firms’ sustainable performance?
Infrastructure is by nature a sector subject to sustainability scrutiny. The United Nations estimates that infrastructure generates about 79% of total global GHG emissions and is expected to represent about 90% of the global climate adaptation costs to 2050. Furthermore, infrastructure is increasingly subject to disruptions due to climate change and related economic losses.
So it comes as no surprise that in the last few years, sustainable fundraising has constantly grown, reaching a peak of $1.1 trillion in 2022. Behind this trend, there are a number of factors explaining the growing importance of sustainable infrastructure investments, among others escalating crackdowns from regulators, the need to avoid possible litigation from environmental campaigners as well as reputational damage, evolving stakeholder expectations and growing investor scrutiny.
Against this backdrop, the integration of sustainable investment principles into investment decisions has recently ignited a policy debate about the role of finance in addressing global challenges and balancing financial performance with broader societal impacts.
Academic research is not conclusive on whether sustainable investing is compatible with the fiduciary duty of financial advisors, fund managers, and institutional investors to act in the best interests of their clients or beneficiaries.
The topic will be discussed at the third annual virtual event of the new five-year partnership under the Antin IP Associate Professorship in Infrastructure Finance. Stefano Gatti (in photo), Antin IP Professor of Infrastructure Finance of Bocconi University and director of the Structured Finance and Investment Banking (SFIB) research unit of the Baffi Centre, explains: “We are presenting the preliminary results of the research on private equity and sustainability, focusing on how private investors in infrastructure contribute to more sustainable corporate performance of their portfolio investments. We will also present the findings from the fourth issue of the Observatory on Infrastructure Pricing, which centers on the related topic of climate change and impact on the returns of infrastructure as an asset class”.