Institutional investors, alternative asset managers and ESG preferences

Research output: Contribution to journalArticleScientificpeer-review


We survey institutional investors to understand why they integrate environmental, social and governance (ESG) factors into their investment management processes. Using a unique data set, we find that limited partners (LPs) are motivated to incorporate ESG because they believe that ESG usage is more strongly correlated with financial performance. We find that general partners (GPs) are motivated to integrate ESG factors into their investment strategies in response to increased client demand for sustainable products. Furthermore, we find that private equity (PE) uses ESG factors more intensely than venture capital (VC) regardless of geography. We also find that PE firms use voice and exit strategies more extensively than VC funds in efforts to promote ESG activities in companies. When evaluating individual components of ESG scores, we find that the investors consider the governance score the most important component, followed by E, and then S.

Original languageEnglish
Pages (from-to)821-868
Number of pages48
JournalEuropean Business Organization Law Review
Issue number4
Publication statusPublished - Dec 2022


  • Institutional investors, ESG, Private equity, Venture capital, Voice, Exit


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