I was pleased to see your business school “instant teaching case”, but the article “Is private equity responsible for child labour violations?” (Special Reports, FT.com, February 6) needs to put a different question.
In reality, most private equity firms and pensions funds understand that strong social performance on child labour protects investment value. Ironically, these finance industry players often exhibit a greater understanding of this concept compared with many others in the finance sector. So, there is something redundant in some of the questions that this article poses for readers.
The questions should be about the efficacy of current practices to protect that value. The persistent prevalence of issues such as child labour begs the question: why is the current approach not working and how do we better identify and manage these risks?
The article hints at the need for a mindset shift in our approach to the integration of environmental, social and governance issues. We must move beyond practices that contradict policies, beyond box-ticking exercises and surface-level assessments.
Instead, we should adopt a more comprehensive and proactive strategy that goes beyond mere compliance to ensure business practices do not destroy value. This entails embedding ESG considerations into every stage of the investment process and fostering a culture of responsible investing across the industry.
With the support of assurance partners and crucially, data capabilities from supply chain intelligence platforms, we have an opportunity for introspection and action. Let us seize this moment to rethink our strategies, redefine our priorities and support private equity to pave the way for a more sustainable and equitable future.
Erin Lyon
Head of Consulting, LRQA, London EC2, UK
