ESG practices and investment decisions in private equity funds: recovering debates on business sustainability

Abstract

Purpose This study aims to show how configurations of the institutional environment, client expectations and fiduciary duty influence private equity (PE) managers in integrating environmental, social and governance (ESG) aspects into the investment decision-making process. Design/methodology/approach The research design combined bibliographic and documentary analysis (including the regulatory framework and secondary sector data) with a phenomenological approach, supported by interviews with managers of PE firms and content analysis. Findings The findings revealed the impact of the sociocultural environment on the adoption of ESG practices in investment decisions, the perception of international pressures to embrace ESG principles that differ from national needs, and the diversification of strategies implemented due to excessive regulation. Originality/value The study’s uniqueness lies in both the phenomenological approach used to comprehend how concerns about ESG practices influence PE fund investment decisions and the identification of factors not typically emphasized in the literature as moderators of this decision-making process.