Thought Leadership and Resources




 

Governance in Emerging Market Private Capital: A Practical Resource for Investors and Fund Managers

By necessity, this document provides a high-level overview of the key ingredients of good governance. It does not go into great detail on the individual components; rather, it is meant to be a resource to assist practitioners in thinking through this vital topic. As appendices, we have included a master checklist to help you think through key good governance considerations, as well as a repository of resources to which you may refer to get further details on specific topics. The fundamental takeaway is that the governance of a portfolio company, fund management firm or fund is not one-size-fits-all. Each country is different—with its own regulations and governance standards—each sector is different, and each firm is different. Therefore, good governance requires thoughtful consideration and tailoring of policies, processes, and procedures, and the cultivation of an ethical culture.

Why Good Governance Matters

Good governance is core to private equity's value proposition in emerging markets—and it always has been. As active investors, PE firms can play a material role in an organization's performance, in terms of both supporting sustainable growth through value creation and mitigating risks. Good governance policies are also often required by the regulatory environment(s) in which a PE fund/investor operates— through these vary significantly across EM. This section briefly examines these three themes.

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Private Equity’s Role in Delivering the SDGs: Current Approaches and Good Practice

The U.N. Sustainable Development Goals (SDGs or Global Goals) provide a global framework for addressing the most urgent global social and environmental challenges. They set out a pathway to inclusive growth and represent a call to action for the private and public sectors as well as civil society. The private sector has a critical role to play in achieving the SDGs, and private equity (PE) investors are in a unique position to invest in and influence businesses in a manner that creates positive change. Given that success in delivering the SDGs hinges on the economic growth and progress of developing countries, emerging markets (EM) investors can be particularly influential.

Interest in SDGs and PE in Emerging Markets

The EMPEA ESG Community expressed an interest in understanding how to approach to the SDGs through the lens of private equity in emerging markets. An SDG Working Group was formed to lead the development of a report that would provide guidance to general partners (GPs) and limited partners (LPs) actively investing in emerging markets. A wide variety of PE firms, as well as the broader industry that supports and enables PE investment, recognize the significant opportunities that the SDGs provide for new investments that deliver bigger and more demonstrable development impact.

Download the full SDG Report and Case Studies » |  View EMPEA ESG Community Case Studies » |  View the EMPEA ESG Community SDG Resource Database »





 

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