Demand for portfolio sustainability leaders is on the rise
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Over the past 12 months, private markets have experienced significant challenges in how sustainability is integrated into investment strategies. With shifting regulatory requirements and a volatile political and economic environment, the role of sustainability professionals has been tested and questioned more than ever before. However, one constant theme has emerged from the industry: increasing focus on value creation in all sustainability efforts.
Sustainability's new role in private equity
In today’s private equity landscape, sustainability professionals are no longer seen solely as compliance experts. Their role has evolved to encompass a broader responsibility: driving value across the investment lifecycle. By bringing a sustainability lens to deal structuring and portfolio management, they can unlock long-term value that goes beyond traditional financial metrics. This alternative perspective is crucial to identifying opportunities that can deliver both economic and sustainable outcomes.
However, the success of these efforts hinges on the active involvement of portfolio companies. Without buy-in and expertise from within the portfolio, sustainability strategies often fail at the implementation stage. As such, one of the most important developments in the private equity sector is the increasing demand for sustainability talent at the portfolio company level. This demand reflects a growing recognition that in-house sustainability professionals - who understand the unique challenges and opportunities of individual companies - are vital to driving successful, impactful strategies.
However, the success of these efforts hinges on the active involvement of portfolio companies. Without buy-in and expertise from within the portfolio, sustainability strategies often fail at the implementation stage. As such, one of the most important developments in the private equity sector is the increasing demand for sustainability talent at the portfolio company level. This demand reflects a growing recognition that in-house sustainability professionals - who understand the unique challenges and opportunities of individual companies - are vital to driving successful, impactful strategies.
The push for in-house sustainability talent
At PER, we have observed a marked uptick in requests from clients seeking sustainability talent within their portfolio companies. The value of this role is undeniable, offering several key advantages:
- An internal sustainability leader ensures that strategies are executed with the necessary expertise and focus. This leadership is critical to driving real change and ensuring the company’s sustainability initiatives are aligned with broader business objectives
- A dedicated function within the portfolio company supports deeper engagement with sustainability efforts, ensuring consistent backing across an organisation
- The direct knowledge and feedback provided by in-house sustainability experts enable a more nuanced approach to strategy development. This facilitates creating bespoke sustainability initiatives that address the unique needs and challenges of each portfolio company
By embedding sustainability expertise within portfolio companies, private equity firms can significantly improve the effectiveness of their sustainability efforts. This decentralised approach not only leads to more engaged companies but also results in better, more sustainable value creation over time.
The increasing demand for portfolio-level sustainability talent reflects a natural and expected progression in the industry, particularly as the private equity sector continues to adapt to the challenges and opportunities presented by a rapidly changing global landscape.
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