Private equity and sustainable value: managing what matters

Private equity and sustainable value: managing what matters

GoodBlog | read time: 5 min

Published: 21 October 2025

As sustainability becomes increasingly central to long-term business success, investors and management teams alike are looking beyond short-term financial performance to the underlying factors that drive resilient growth and value. In private equity, where value creation depends on operational improvement and strategic clarity, there is growing recognition that sustainability indicators are not just moral imperatives – they are material drivers of financial returns.

Private equity firms, with their active ownership model and focus on transformation, are uniquely placed to influence how businesses address sustainability. Yet there is inevitably a challenge to ensure that growth strategies are aligned with sound environmental, social and governance (ESG) practices that underpin long-term value creation.

Sustainability indicators linked to performance

A growing body of research demonstrates that companies with strong performance on key sustainability metrics outperform their peers financially. Indicators such as energy efficiency, employee engagement, supply chain resilience, and good governance are repeatedly linked to improved profitability, reduced risk and enhanced brand reputation.

GoodCorporation’s experience across multiple sectors supports this.

We have observed that:

• Employee wellbeing and retention initiatives are strongly associated with improved productivity, lower turnover costs and enhanced innovation capacity.
• Improved supplier oversight and responsible sourcing frameworks reduce the risk of supply chain disruption, reduce risks of exploitation of people and the environment and so protect brand reputation and create stronger long-term partnerships.
• Energy and resource efficiency programmes consistently deliver measurable cost savings alongside emissions reductions, demonstrating that environmental improvements can directly enhance financial performance.
• Strong governance and accountability structures, particularly around anti-bribery, climate and environmental protection, data ethics and human rights, reduce regulatory and reputational risk and help maintain stakeholder confidence.

These sustainability indicators are not peripheral—they go to the heart of operational excellence and long-term value creation.

The management challenge

However, embedding and managing these indicators is far from straightforward.

Sustainability metrics can be difficult to define, measure and compare across different businesses and sectors. Data collection may be inconsistent, and translating ESG ambitions into operational priorities requires sustained engagement from leadership teams.

At GoodCorporation, we work with organisations to help them identify and manage their material sustainability indicators — those that have a genuine impact on business performance and stakeholder trust. This begins with a clear understanding of what matters most: the intersection between sustainability issues, financial/commercial objectives, and risk exposure.

Typical indicators we focus on are drawn from the governance and management of core ESG issues, including:

• Human rights – ensuring respect for labour rights, diversity, equality, and inclusion throughout operations and supply chains.
• Bribery and corruption – maintaining strong ethical and compliance frameworks to safeguard against misconduct and reputational harm.
• Workplace culture – fostering a responsible and inclusive culture that supports employee wellbeing, engagement, and long-term retention.
• Supply chain integrity – building transparency and due diligence into supplier relationships to ensure responsible sourcing and resilience.
• Managing environmental impacts – identifying and mitigating environmental risks, improving resource efficiency, and aligning with the transition to a low-carbon economy.

Concentrating on these material governance and sustainability areas helps organisations simplify reporting, direct investment where it matters most, and demonstrate measurable progress over time. It also ensures that ESG is managed as an integral part of business performance, rather than a parallel reporting exercise.

Identifying what is material

GoodCorporation’s ESG and Sustainability services are designed to help organisations focus on the issues that truly drive performance. We support companies and investors in mapping their material sustainability indicators, aligning them with both business strategy and stakeholder expectations.

This focus on materiality ensures that sustainability efforts are both manageable and impact meaningfully on environmental, social and governance outcomes — supporting financial objectives rather than distracting from them.

Embedding sustainability into strategy and governance

To achieve sustainable performance, companies need to embed ESG considerations into core decision-making and governance structures. Boards and executives should treat sustainability with the same discipline as financial performance. It should be reviewed regularly, measured accurately, and linked to incentives.

Effective governance also depends on clarity of responsibility. ESG ownership should not sit solely with a sustainability function; it must be embedded across business units, supported by leadership engagement and transparent oversight mechanisms. This approach builds the cultural and structural foundations for long-term progress.

Data, measurement and transparency

Reliable, comparable data is essential to manage performance and demonstrate progress. Many businesses still struggle with fragmented data systems, inconsistent definitions, or incomplete coverage across operations. GoodCorporation’s assessments using our suite of proprietary frameworks often reveal the need for stronger internal controls and verification processes to ensure that reported data is both accurate and valuable to strategic decision-making processes.

Aligning measurement systems for non-financial outcomes is still work in progress. The  International Sustainability Standards Board (ISSB) standards (IFRS S1 and IFRS S2), allow companies to build credibility and comparability in relation to sustainability related financial disclosures. There is also a need for ISSB, ESRS and GRI to maintain their interoperability but the reporting tail should not wag the sustainability dog. Sustainability impacts related to the planet and people must remain the focus for investors and corporates. Private equity and other investorsneed to gain clearer insight into substantive sustainability performance across their portfolios, enabling them to identify both risks and value-creation opportunities.

Transparency builds trust. Businesses that communicate their sustainability performance openly, including both achievements and areas for improvement, tend to strengthen relationships with regulators, investors, customers and employees alike.

Capability and culture: the human dimension

Sustainability performance depends on people as much as systems. Building understanding and accountability at every level, from boardrooms to front-line teams, creates the foundation for enduring change.

Cultural alignment also plays a critical role during mergers and acquisitions. Where sustainability values are shared and clearly articulated, integration is smoother and stakeholder relationships stronger. Private equity investors who prioritise ESG due diligence at the acquisition stage can therefore mitigate future risks and accelerate value creation.

From compliance to competitive advantage

The direction of travel is clear: sustainability is no longer a compliance exercise but a source of competitive advantage. Well-managed sustainability indicators can enhance resilience, reduce costs, strengthen brand reputation, and attract and retain both customers and talent.

Private equity firms that proactively support their portfolio companies in building robust ESG management systems are better positioned to deliver sustainable financial returns. This includes providing access to expertise, setting clear expectations for sustainability performance, and incorporating ESG outcomes into value-creation plans from the outset.

Building sustainable businesses together

Sustainability and value creation are not competing priorities but complementary objectives. Yet delivering on this potential requires alignment, commitment, and effective management.

GoodCorporation’s experience shows that when sustainability indicators are clearly defined, integrated, and well managed, they deliver measurable value for investors and society alike.

For private equity firms and their portfolio companies, this represents both a challenge and an opportunity: to build businesses that are not only financially successful but also resilient, responsible, and ready for the future.

 

About GoodCorporation

GoodCorporation works with leading organisations, investors and boards to build responsible and sustainable business practices. Through our ESG and Sustainability services, we help companies identify their material sustainability indicators, assess performance, and implement the management systems needed to deliver meaningful improvement.

Our work spans ESG strategy development, materiality assessments, sustainability governance, and the integration of ethical and responsible business practices and procedures. Drawing on more than two decades of experience assessing corporate responsibility and compliance, we support organisations to design, build, embed and evaluate effective ethics and compliance programmes.

GoodCorporation’s independent assessments and advisory work help businesses and investors alike to strengthen resilience, enhance long-term value, and demonstrate a genuine commitment to sustainable growth.

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