Track Description
The topic focuses on the role of private investors in addressing sustainability topics. The main questions to which the contributions could provide some answers are the following ones:

• Are private investors incorporating ESG metrics in the selection of their investments?
• What is the performance of private funds which adopt sustainability policies?
• Does sustainability performance impact on the financial returns of private investors?
• Do investees improve their sustainability performance when they receive funding from private investors?
• Do investees create sustainable value on a long-term basis when receiving funding from ESG-driven private investors?

Private investors are often associated with a return-driven approach seeking short-term financial gains at the expense of broader societal impacts. However, recent research (Bellon, 2022; Cojoianu et al., 2022; McCahery et al., 2022) has highlighted the potential of financial sponsors to drive sustainability improvements in their portfolio companies due to their active involvement and comprehensive control rights.

The fundamental tension between the demand for high returns over relatively short investment horizons and the long-term nature of ESG value creation presents a structural challenge to ESG adoption. Moreover, the recent political backlash against ESG investing, particularly in the US, has led to growing skepticism and potential reputational risks for asset managers, potentially cooling enthusiasm for ESG initiatives. However, recent evidence from the World Economic Forum indicates that major institutional investors do not intend to retreat from responsible investment practices. On the contrary, most plan to strengthen their ESG commitments over the coming years.

As PE and VC funds continue to expand their influence across the global economy, understanding whether and how they contribute to ESG progress is increasingly urgent.
Scholars have provided some initial contributions and some empirical evidence on the relationship between sustainability issues and the investment approach of private investors. However, more contributions are needed to better understand how private investors identify the relevant ESG indicators to screen the investment opportunities and the potential trade-off between ESG indicators and financial returns. Moreover, it would be appropriate to dig more in depth the combined use of ESG and financial performance metrics to understand the sustainable value creation of companies receiving funding from private investors.