An AsianInvestor article titled "Asian Investors Dial back ESG Efforts but Sustainability Goals Endure" reported the key findings of MoFo's recently released Asia Funds ESG Survey 2023, which found that amid an overall slowdown in ESG activity, fewer than one in four had pulled out of an investment process after discovering ESG problems during due diligence.
According to Marcia Ellis, Global Co-Chair of the firm's Private Equity practice and a co-author of the report, this wasn’t evidence of investors shrugging it off and accepting the shortcomings, but a sign of their determination to address them and an indicator of increased potential for returns. “The question is whether any remedy to the ESG problems will destroy the profit of the portfolio company, or whether it’s something you can figure out a way to solve and, by doing so, increase the portfolio company’s value for you as an investor,” . “A lot of private equity funds don’t mind at all if there’s a problem, because they can take it to the negotiating table and reduce the price of the target.” said Marcia.
Singapore Project Finance Partner Per Lindberg also mentioned that even though the regulatory impetus to comply with ESG standards was generally less forceful in Asia than in the European Union and the United States, investors were coming under increased pressure to ensure that portfolio companies with business links to those jurisdictions were compliant with their regulation.
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