Private Equity: Greenwashing Galore

We are awash with ESG slogans – companies often include a glorified caption of how they care about their employees, environment and our children’s future.

This has reached a point where we are flooded with advertisements for sustainable groceries, home appliances, holidays, and pro-ESG workplaces. Even massive polluters like Rio Tinto now claim they are decarbonizing the high seas, and Exxon has committed to net-zero targets in some far-away future. The to-go coffee we had today morning had in big font: “Made With Love, 100% Sustainable.”

But what is exactly sustainable? The coffee? The water? The transport of coffee grains all the way from Bolivia? The energy used in production or fair wages for farmers? Of course, the coffee chain is owned by a private equity (PE) firm, and given the unregulated nature of these entities, it is hard to give them the benefit of doubt. The pressing question remains: how many of these proclamations are substantiated by genuine actions and transparent data?

Prof. Garen Markarian, HEC Lausanne, and Alexander Semionov, HEC Graduate Student in finance’s working-paper, available on SSRN, examine the ESG practices of the top 100 PE firms in the United States. 

Discover the results and proposal by reading the complete article on our HEC Lausanne Research Center for Grand Challenge Blog.