Although banks are taking the brunt of the blame for the global financial crisis, private-equity firms are feeling the pressure, too. The latest sign: Guidelines for Responsible Investment announced last week by the Private Equity (PEC), a US trade group representing major firms such as Blackstone, Carlyle, and KKR. The voluntary guidelines say PEC firms will consider environmental, public health, safety, and social issues associated with target companies, Global Proxy Watch reports.
The commitments were worked out in private talks hosted last year by the United Nations Principles for Responsible Investment involving leading pension funds such as the UK’s Universities Superannuation Scheme and the California Public Employees Retirement System. Advocates should hold the champagne, though. The guidelines have no teeth, such as monitoring, reporting, or enforcement procedures.
The PEC rejected stronger language in parallel talks that eventually broke down with the Service Employees union and other US labor funds. Still, the guidelines offer funds investing with private equity firms a new way to hold them accountable on environmental, social, and governance (ESG) issues.