ESG positioning in private infrastructure fundraising

Abstract

We examine if environmental, social and governance (ESG) positioning by private equity infrastructure funds affects fundraising success. We use novel hand-collected data from a proprietary sample of fund marketing documents. By adapting methodologies from the extant literature on private equity fundraising, we directly address the fundraising event rather than the time between successor funds. Our results from private equity infrastructure fundraising events between 2006 and 2021 indicate that ESG positioning in fund marketing documents does not have a significant impact on fundraising success. This is an important finding as it suggests that investors do not respond to ESG-related claims in marketing materials at the fund level. However, there is some evidence of a weak positive relationship between ESG positioning and fundraising success that we observe in the earlier sample period that has dissipated in more recent years. This might be explained by firms trying to materialize value from “cheap-talk” due to first mover advantage.