No Match Found
Private equity firms are increasingly recognising the value of ESG, with 70% considering it one of the top three drivers.
Although direct financial results are difficult to measure, qualitative benefits such as brand positioning, risk mitigation and market differentiation are widely recognised.
Leading companies are actively seeking ESG-related opportunities, incorporating them into their exit strategy, leveraging green incentives and attracting green finance.
ESG factors are now – and increasingly – woven into the deal lifecycle. And in doing so, they influence sourcing, due diligence, post-acquisition implementation and deal terms.
Assigning financial value to ESG considerations remains a challenge, with up to a third of companies incorporating ESG factors into valuations.
In the previous survey (on Belgian PE firms), we observed that Belgian PE firms’ responsible investment (ESG/RI) activities are driven more by corporate values than value creation opportunities. In 2023, we see the same trend, largely because most Belgian actors are still family owned. At global level, however, 70% of respondents are pursuing efforts to identify value creation potential through ESG activities. Nonetheless, at both global and national [Belgian] levels, firms are bringing ESG considerations into their investment decisions, specifying ESG-related opportunities as they define their deal theses.
“In all transactions, ESG is on the agenda. However, the link to value creation is still untapped in the Belgian ecosystem.”Philippe EstasPartner Deals | Transactions & Private Equity Leader at PwC
Like other PE firms globally, Belgian actors are increasingly trying to integrate ESG considerations into the valuation of companies. The valuation usually hinges around the one or two ESG topics that present the most significant risk for the company.
of PE respondents say their organisation embeds ESG into valuation analysis.
Belgian actors are also slowly following the global trend of seeking to source new deals using ESG considerations as a lens. However, these respondents predominantly report seeking value creation through qualitative factors that are often associated with stronger financial performance, such as competitive differentiation and brand enhancement.
A vast majority of Belgian PE firms have adopted ESG tools and policies formalising their ESG approach. This maturity is driven by two main factors: their own corporate values and value creation opportunities. At a portfolio level, ESG factors are more often taken into consideration in relation to executive pay and remuneration for Belgian respondents than globally. In addition, monitoring the ESG performance of their portfolio companies is becoming even more popular compared to the 2021 Belgian survey.
“Increasingly, we observe that ESG can be used to source opportunities, such as PE firms raising funds for Article 9 funds.”Peter OpsomerPartner Deals
Diving into the specific ESG topics, we observe some similarities with global respondents, although compared to Global respondents Belgian one seems to focus less on environmental topics, beyond climate change and energy.
A vast majority of global and Belgian respondents say their organisation sees greenhouse gas emissions and climate risk as material topics, along with the management of environmental impacts.
Although the share of global respondents who identify biodiversity as material remained about the same as in 2021, more of those respondents (34% versus 27%) now say their organisation plans to address it in the coming year. Biodiversity is not a subject in Belgium.
We asked respondents about 16 social and governance topics. On 10 of them, more than 70% of respondents, globally, say their organisation sees them as material, and more than 50% say their organisation has already taken action.
Partner, Deals - Transactions & Private Equity Lead, PwC Belgium
Tel: +32 477 27 07 50
Partner, Deals - ESG and Delivering Deals Value, PwC Belgium
Tel: +32 475 55 16 70