ESG management systems (ESGMS) are now well established as good practice in the private equity industry. Furthermore, the development, implementation and maintenance of an ESGMS has become a prerequisite for receiving funding from Development Finance Institutions (DFIs) and an increasing number of other investors. A well designed and properly implemented ESGMS should add value to the fund and its stakeholders by:
Management systems need to at least cover environmental and social (E&S), corporate governance and business integrity factors. It is up to each fund to decide whether and how to integrate these systems. Most will find it convenient to have two related, but separate, sets of management system: (i) an environmental and social management system (ESMS); and (ii) a governance and business integrity management system (GBIMS).
The two systems will intersect at different stages of the investment cycle, and information collected and managed by both sets of procedures will complement and support one another, guiding how the fund conducts its business.
For further guidance on where to start when setting up an ESGMS, see Getting started.
If you are already familiar with environmental and social management systems, see Fund Environmental and Social Management Systems.
If you are already familiar with governance and Business Integrity management systems, see Fund Governance and Business Integrity Management Systems.