Morgon’s ousting at Eurazeo was not a comment on ESG

This week Virginie Morgon, CEO of Paris-listed investment manager Eurazeo, was ousted from her post and replaced with an executive committee. As CEO since 2018, Morgon has been a prominent advocate for sustainability in private markets and an influential female voice in the industry.

When our colleague Adam Le visited her at the firm’s Paris HQ in 2019, she spent the first half of the discussion talking about the importance of ESG and the fact that the firm was (and remains) the only listed investment company to be integrated in five families of non-financial benchmark indices.

When she spoke to delegates at IPEM, a private equity industry conference in Cannes, France, in early 2020, she focused on the need for PE firms to do their “fair share” in tackling the major crises of our time: inequality and climate change. She used the platform to exhort peers to combat inequality, measure ESG data from their portfolios, put climate change at the centre of what they do, and to redouble efforts to foster gender diversity within the industry.

The growth of private equity firms’ assets and influence meant that it was now they – not the big banks – who would be in the firing line. “I do know, and I am sure you share that, that we will be front row; meaning governments, regulators will come straight after us,” she said.

Later that year the firm outlined its overall ESG strategy – dubbed “O+” – outlining its objectives around the two themes of carbon emissions and “bridging the widening social gaps”. Within the plan, the firm committed to achieve net zero by 2040 in alignment with the Science Based Targets initiative and consider carbon valuation in its business plans. It also committed to having at least 40 percent of portfolio company board members “belonging to the underrepresented gender” with the same target for Eurazeo’s own executive management team. It promised to “pursue health, life and disability insurance all over the world”. The most recent report on its progress against the plan is available in its 2021 review, with the new version due out in April.

Morgon’s departure from the firm was, according to affiliate title Private Equity International, a surprise both for market participants and for Morgon herself, who found out only in the previous week, according to an insider with knowledge of the matter. The decision to end her tenure was driven by investor dissatisfaction with share price growth and concerns about fundraising progress for its flagship private equity vehicle, sources told PEI. It was not a comment on the firm’s embrace of ESG.

In the post-Morgon era, we expect Eurazeo to maintain its ESG-forward position. Among the people on the four-person executive committee that takes over leadership is Sophie Flak, a sustainability veteran who has led the firm’s ESG efforts since 2013. The strategic priorities of the firm – including sustainability – remain the same, one equity analyst tells me after a call with the firm’s management.

While none of Eurazeo’s commitments made Eurazeo unique, they did position it among the vanguard of sustainability-minded private markets firms. Morgon should be applauded for her role in this.