In brief: GPs try stalling to manage conflicting LP ESG expectations

Sometimes LPs don’t bother following up on their questionnaires, ‘which is great’, said one investor relations professional.

GPs being bombarded with ESG questions from investors have a few options. They could say ‘no’, as some private equity heads of ESG reported telling their LPs in the context of portfolio company management earlier this year. And to satisfy LPs sending in conflicting ESG due diligence questionnaires, GPs could try stalling and hope they don’t receive follow-ups.

“My grand plan is to publish a very overarching ESG policy and distribute that to everyone,” the head of investor relations at a mid-market private equity firm said, speaking at PEI Group’s Investor Relations, Marketing and Communications Forum this week. Investors will follow up if more detail is important enough to them, the IR head continued.

“I’ve found that’s very ‘hit-and-miss’,” an investor relations professional at another firm said. Sometimes LPs “don’t bother” following up, “which is great”, but “sometimes they all really want to know”.

The volume of conflicting ESG due diligence questionnaires from LPs is “like death by a thousand cuts”, the first head of IR said.