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Private Equity Council members adopt guidelines for responsible investment

The Washington DC-based Private Equity Council has announced that its members have adopted a set of responsible investment guidelines that they will apply prior to investing in companie

The Washington DC-based Private Equity Council has announced that its members have adopted a set of responsible investment guidelines that they will apply prior to investing in companies and during their period of ownership.

The guidelines cover environmental, health, safety, labour, governance and social issues.

They grew out of a dialogue between council members and a group of the world’s major institutional investors, which took place under the umbrella of the United Nations-backed Principles for Responsible Investment.

‘Private equity is all about investing for growth and maximizing returns to our investors. To accomplish that today requires considering a range of environmental, governance, human capital, and social issues,’ says Private Equity Council president Douglas Lowenstein (pictured).

‘Today’s announcement explicitly and formally affirms PEC members’ commitment to fully integrating these responsible investment guidelines into both our pre-investment and post-investment processes.’

Principles for Responsible Investment executive director James Gifford says: ‘A year ago, we reached out to the private equity sector, including the Private Equity Council, to launch a dialogue on how best to address environmental, social and governance issues in line with the PRI Principles.

‘Today’s announcement by the Private Equity Council that its members have adopted these comprehensive guidelines on responsible investment marks a major step forward in our efforts to elevate environmental, social and governance issues at all companies, public and private. We are pleased that the council has committed to meeting with us twice annually to have a sustained dialogue on these guidelines and environmental, social and governance issues.’

The guidelines call for PEC member firms to consider environmental, public health, safety, and social issues associated with target companies when evaluating whether to invest in a particular company or entity, as well as during the period of ownership.

In addition, firms should seek to be accessible to, and engage with, relevant stakeholders either directly or through representatives of portfolio companies, and seek to grow and improve the companies in which they invest for long-term sustainability.

The guidelines also require members to remain committed to compliance with applicable national, state, and local labour laws in the countries in which they invest; support the payment of competitive wages and benefits to employees; provide a safe and healthy workplace in conformance with national and local law; and, consistent with applicable law, will respect the rights of employees to decide whether or not to join a union and engage in collective bargaining.

They also call on firms to maintain strict policies that prohibit bribery and other improper payments to public officials consistent with the U.S. Foreign Corrupt Practices Act, similar laws in other countries, and the OECD Anti-Bribery Convention; respect the human rights of those affected by their investment activities; provide timely information to their limited partners; and encourage their portfolio companies to advance the principles in a way which is consistent with their fiduciary duties.

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