Continuing with today’s theme of ESG investing and ESG value, a new paper has documented ESG-driven value among private equity holdings. Stanford Long-Term Investing partnered with British Columbia Investment Management Corporation (BCI) to study how ESG is creating value among BCI’s holdings. The paper breaks down three case studies and provides a framework for those looking to emulate BCI’s success. The first case study examines ESG policies at a logistics & transportation company. Here’s what the authors found:
“On the revenue side, the company’s ESG-aligned positioning has enhanced competitiveness in RFP processes, particularly among enterprise shippers focused on decarbonizing their supply chains. This has helped defend market share and, in several cases, expand it. Overall, BCI PE estimates that this ESG-linked strategy contributed to a projected $144 million uplift in enterprise value, driven by improvements in retention, safety performance, fuel efficiency, and commercial differentiation.”
It can be difficult for researchers to tie ESG to finanical value. This is because ESG means drastically different things across different contexts. A company may “have an ESG program,” but that program might be siloed with no real impact on operations. That is what drove the authors to partner with BCI specifically. BCI operationalizes its ESG initiatives and ties ESG to core value creation. Rather than treating ESG as political or philanthropic, BCI views ESG matters strategically. For those looking for inspiration in quantifying ESG value, the case studies presented in the paper are a great place to start.
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