Case
Leading private equity firm
Published
19 September 2025
Faced with the complexities of managing a large and diverse portfolio of companies, a leading private equity firm recognised the need to establish a comprehensive sustainability framework. Working with Implement Consulting Group, the initiative was designed to not only guide its investment strategy but also transform sustainability into a core value driver at both the fund and portfolio company levels.
Sustainability as a value driver in private equity
In a dynamic investment landscape, private equity firms must navigate an array of environmental, social, and governance (ESG) regulations while striving to differentiate themselves. Data show that businesses with strong ESG practices can see valuations rise by up to 10%-20% compared to less sustainable peers, highlighting the growing importance of sustainability in investment decisions.
The firm sought to embed sustainability deeply within the portfolio companies, acknowledging the potential to mitigate risks, enhance growth opportunities, and increase financial returns. However, the variability in maturity across its portfolio posed a significant challenge, necessitating a standardised yet adaptable sustainability strategy approach.
A playbook for unleashing the full value potential of sustainability
To address these challenges, the PE firm developed a sustainability strategy playbook tailored to its portfolio companies. This playbook now serves as a roadmap to embed sustainability within core business strategies, leveraging the firm’s strategic assets and pioneering industry standards.
Key aspects focus on
Compelling and clear reasons to act
The playbook articulates the business case for sustainability, providing strong value propositions backed by industry trends and regulatory requirements. It includes best practices and case studies to inspire innovative sustainability solutions, which are increasingly recognised by investors as key factors in assessing operational robustness and future growth prospects.
Defining sustainability as a value driver
The playbook focuses on integrating sustainability into the portfolio companies' core strategies. This involves aligning sustainability initiatives with business objectives, thus making them pivotal to value creation. Recent trends indicate that companies with robust sustainability practices tend to outperform in long-term performance, becoming more attractive to potential acquirers.
Designing differentiated engagement models
Recognising the diversity within its portfolio, the firm developed scalable engagement models tailored to each company's size, maturity, and industry sector. This approach ensures that sustainability strategies are adaptable and can evolve alongside business growth, aligning investment opportunities with expanding ESG demands from institutional investors.
The implementation of the sustainability strategy playbook is ongoing and will lead to measurable impacts across the firm’s portfolio:
- Operational and financial gains: By promoting sustainable practices, portfolio companies have achieved operational efficiencies and tapped into new market opportunities. Sustainability-driven innovation has led to revenue enhancement, including green sales and price premiums, aligning with broader market trends where sustainable products and services gain competitive advantage.
- Risk management and regulatory alignment: The firm has successfully reduced portfolio-level risks associated with ESG issues through proactive engagement and compliance with regulations.
- Cultural transformation: Sustainability is now a cornerstone of value creation within the firm’s strategy, driving cultural change and increasing engagement at all levels. Clear alignment of sustainability strategies with business goals fosters a cohesive approach to long-term growth, a trend that is increasingly essential as PE firms face investor scrutiny on ecological and social impacts.
This approach taken by the PE firm underscores the transformative potential of integrating sustainability into the core strategy of private equity-managed portfolio companies.
By aiming for a leadership position within the industry, the firm not only responds to regulatory pressures but also unlocks new avenues for value creation. The sustainability strategy playbook is pivotal in guiding portfolio companies to harness sustainability as a key lever in advancing their competitive edge.
Hopefully, this approach can serve as a model for other private equity firms looking to navigate a complex and evolving regulatory landscape while delivering sustainable financial returns. As the industry shifts, those who embrace sustainability stand to gain significant valuation benefits, thereby positioning themselves advantageously in future market transactions.