Private equity giants sign up to code

Some of the world’s best-known private equity companies have agreed responsible investment guidelines.

The companies, all members of the US-based Private Equity Council (PEC), will apply the guidelines before investing in businesses, as well as during ownership, which typically lasts seven years.

The guidelines cover environmental, health, safety, labour and governance issues, ‘openness with stakeholders’ and ‘respect for human rights’.

Companies that have voluntarily  agreed to observe the principles include Apax Partners, Apollo Global Management, the Blackstone Group, the Carlyle Group, Kohlberg Kravis Roberts, Hellman & Friedman, Permira and Silver Lake.

The guidelines have emerged from year-long discussions between PEC members and a group of the world’s largest institutional investors that have endorsed the United Nations-backed Principles for Responsible Investment (PRI).

In addition, the PEC has committed itself to meeting PRI officials twice a year for a ‘sustained dialogue’ on responsible investment.

PRI executive director James Gifford said the deal ‘marks a major step forward’ for private equity companies, which have increasingly been accused of falling behind public limited companies in their corporate responsibility efforts. Private equity firms have countered that CSR is important for them as reputation affects the value of companies when sold.

The nine main areas of the guidelines include requirements to improve the companies in which businesses invest ‘for long-term sustainability and to benefit multiple stakeholders’, and to ‘implement executive compensation policies that align the interests of owners and management’.