ENVIRONMENTAL, SOCIAL, AND GOVERNANCE (ESG) CONSIDERATIONS IN INDIAN PRIVATE EQUITY: EMERGING IMPERATIVES AND INVESTOR PERSPECTIVES

Abstract

This study explores the integration of Environmental, Social, and Governance (ESG) considerations in the Indian private equity (PE) landscape, with a focus on emerging strategic imperatives and investor perspectives. As ESG becomes a global priority in responsible investing, private equity firms in India are increasingly expected to align their investment decisions with sustainability objectives. The study investigates two primary objectives: the extent to which ESG is embedded in PE firms’ decision-making processes, and how investors perceive ESG performance in relation to returns, risk management, and long-term value creation. Based on data collected from 150 professionals across PE firms and institutional investors, the findings reveal a growing trend of ESG adoption, particularly in due diligence and governance practices. However, barriers such as regulatory uncertainty, lack of ESG expertise, and implementation challenges persist. Investor analysis indicates that ESG performance is increasingly viewed as a key driver of financial and strategic outcomes. The study further highlights perceptual differences between general partners (GPs) and limited partners (LPs), with LPs exhibiting stronger ESG alignment. This research contributes valuable insights into the evolving ESG practices in Indian private equity and offers policy and strategic recommendations for fostering responsible investment.