Private Equity’s Role in Delivering the SDGs

Report Overview

The United Nations Sustainable Development Goals (SDGs) offer a universal framework for addressing urgent global challenges. Private equity (PE) investors are uniquely positioned to drive positive change and economic growth, particularly in emerging markets where the need for development is acute. This report, produced by the SDG Working Group under the EMPEA ESG Community, explores current approaches, good practices, and challenges faced by PE investors in aligning their investments with the SDGs.

Key Findings

1. Interest in SDGs and PE in Emerging Markets

• PE investors in emerging markets are increasingly interested in the SDGs, recognizing the substantial opportunities for impactful investments.
• The SDG Working Group has developed this report to provide guidance for general partners (GPs) and limited partners (LPs) on integrating SDGs into investment strategies.

2. Current Industry Practices

• PE investors exhibit varied approaches to integrating SDGs, including mapping existing investments to SDG targets, assessing their contributions to SDGs, and exploring SDG-focused investment strategies.
• Common challenges include the broad scope of SDGs, attribution of impact, and establishing relevant key performance indicators (KPIs).

3. Opportunities and Challenges

• Emerging markets present significant opportunities for PE funds to deliver outcomes across key SDG themes such as clean energy, healthcare, education, gender equality, and decent work.
• Innovative thinking, partnerships, and collaboration are essential for overcoming challenges and maximizing the impact of PE investments on SDGs.

Future Directions

• Drive Change at Scale: Private Equity has the potential to significantly impact underserved markets by aligning investment strategies with SDG themes.
• Collaborate and Build Consensus: The Private Equity industry must work together to develop a common approach to investing in SDGs, defining applicable KPIs and standardized impact reporting methods.
• Show Commitment: LPs are increasingly selecting fund managers who demonstrate credible commitment to the SDG agenda.
• Innovative Partnerships: Collaborations with NGOs, peers, and regulators will be critical in achieving SDG targets.

This report underscores the pivotal role of private equity in advancing the SDGs, particularly in emerging markets. By adopting SDG-focused investment strategies, PE investors can drive meaningful change, foster sustainable growth, and contribute to a more inclusive and equitable global economy. The SDG Working Group encourages ongoing dialogue, collaboration, and innovative thinking to harness the full potential of private equity in delivering the SDGs.