September 30, 2016
Interviewed by: David Snow
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How the AIC is Leading the Charge on ESG

The American Investment Council came up with guidelines for long-term responsible investing for private equity seven years ago. The organization’s president and CEO explains why it’s at the forefront of these guidelines.

The American Investment Council came up with guidelines for long-term responsible investing for private equity seven years ago. The organization’s president and CEO explains why it’s at the forefront of these guidelines.

How the AIC Is Leading the Charge on ESG
With Mike Sommers of the American Investment Council

David Snow, Privcap:
Mike Sommers from the AIC. Thanks for being here. I have a question for you about ESG in private equity. Of course, that stands for environmental, social and governance principles that could be influenced by private equity ownership of a business. What kind of research has your organization done into ESG and what do you think is unique about the private equity view on ESG?

Mike Sommers, American Investment Council:
This is an organization that has really been at the forefront on ESG issues over…the last few years. In fact, in 2009, our organization developed guidelines for responsible investment. This was really the forefront of this movement to ensure that our members were also pursuing responsible investment with their portfolio companies. Since then, we have a very extensive ESG program led by Bronwyn Bailey, our Vice President of Research and Investor Relations.

Snow: One of the objectives of your organizations is to promote responsible, long-term investment. Is there something unique about the private equity model—which is, of course, long-term investment tends to be control of a business—that could further these goals that maybe a public market approach wouldn’t quite get near?

Sommers: One of the big advantages to private equity is that you’re not always just looking at returns from a quarter-to-quarter basis. You’re looking at returns from a long-term perspective and, from an ESG perspective, you’re also looking to ensure that you’re building something big for the future. One big focus point of our members is to ensure that they’re doing that in a responsible way and that they have long-term investment that is done in an environmentally and socially responsible way. All of our members have endorsed the guidelines for responsible investment and I think the private equity industry is going to have a big say as these issues go forward.

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