Doing Well by Doing Good - a Pipe Dream or Reality?

Abstract: Abstract: Prior research lacks definitive proof of ESG's impact on profitability, yet there's an increased demand for sustainable investments in private equity. This study investigates how private equity firms navigate ESG and financial considerations in their investments. Using framing theory, we explore the interplay between a financial frame and an ESG frame. Through a single case study of an ESG-focused PE firm, involving 7 practitioner interviews and analysis of two investment cases alongside public reports, we find that the PE firm aligns with traditional financial practices while adopting an ESG framework akin to SFDR Article 9. We observe a moderate blending of the financial and ESG frame, emphasizing specific ESG factors impacting returns-E over S and G and prioritizing 'handprint' over 'footprint'. Consequently, both frames are moderately blended and influence the firm's acquisition process and tools used.