Does private equity have any inherent social value? Clearly firms are taking a more explicit interest in social issues these days, as part of their broader ESG efforts. But some would still argue that a fund’s sole responsibility is to maximise financial returns to investors, regardless of the social externalities.
Either way, it’s easy to see the potential advantages for GPs of creating this kind of scorecard, if only as a helpful marketing and PR tool. Clearly there will be times when private equity investment has a positive social impact, particularly in terms of business growth and job creation. So any kind of framework that helps firms to articulate that has to be a good thing – especially if it helps to win over one or two of the industry’s critics in the process.