ESG criteria in private equity: a literature review: a mixed-methods approach

Abstract The environmental, social, and governance (ESG) criteria in management science have recently attracted significant attention across all sectors of private equity (PE). This study intends to assess collaborations, identify trends in the area, explore theme groups, and understand the influence of ESG standards in PE. A systematic review employing a mixed-methods approach was used. For the initial analysis, a systematic review of the literature was conducted on 217 documents retrieved from the Scopus database, following the PRISMA guidelines. A closer examination of these studies led to the development of exclusion criteria and a refined list of 36 articles that advance understanding of the impact of ESG criteria in PE. The second analysis, a bibliometric analysis conducted using VOSviewer software, was performed on 126 documents. This study allows us to identify research themes, discover networks of influential researchers in this field, and assess the impact of ESG criteria on the private equity sector. For the bibliometric analysis, this study identified four main groups: “Entrepreneurial finance and impact investing,” “Sustainable development and Risk Management,” “ESG and innovation,” and “Responsible Investment and CSR.” Regarding the systematic review, the main findings indicate that researchers are divided: some have demonstrated that ESG criteria have a positive impact on financial performance (PF), whereas others have shown a negative impact; researchers are also divided on the effect of disclosing non-financial information on investment costs. These findings have significant theoretical and practical implications: they represent a very useful resource for researchers who wish to deepen their understanding of ESG criteria in the private equity sector, for professionals wishing to integrate these criteria into their investment strategies, and for policymakers whose goal is to develop regulatory frameworks. The studies reviewed show that the effects of incorporating ESG criteria in the private equity sector are not uniform. Several factors, including the specific characteristics of different institutional and regulatory contexts, can explain this variation. Second, the characteristics of private equity funds and firms, as well as the quality of published ESG data and disclosure practices, may also play an important role in the observed empirical results. Based on the available evidence, this study is the first systematic literature review using a mixed-methods approach to examine the impact of ESG criteria in the private equity sector.