New Private Markets: Taking the ESG discussion into uncomfortable places

Current investment management practice – even when it is ESG- or impactflavoured – contributes to systemic social injustice and long-term investment risk.

That’s the view put forward by The Predistribution Initiative, a project started in 2019 that seeks to move thinking about responsible investment forward, so it encompasses not just portfolio company activities, but also the more fundamental elements of investment structures and asset allocation.

In other words: current ESG and impact discussions dwell mainly on how, for example, a private equity-owned company might be encouraged to improve its culture of safety or reduce carbon emissions. The Predistribution Initiative, meanwhile, highlights how an investment model that relies, say, on high levels of corporate debt, or one that concentrates wealth among a small number of individuals at investment management firms, is introducing longer term instability into the system.