Not logged in.

Contribution Details

Type Master's Thesis
Scope Discipline-based scholarship
Title The Role of Private Markets in Sustainable Investing
Organization Unit
Authors
  • Philip C. Spahni
Supervisors
  • Jacqueline Haverals
  • Michel Habib
Language
  • English
Institution University of Zurich
Faculty Faculty of Business, Economics and Informatics
Number of Pages 104
Date 2018
Abstract Text Sustainable investing has experienced enormous growth in recent years and can by no means be dismissed as a niche phenomenon. Even though its origins date back quite some time, the present form is still relatively young and is still undergoing change. While sustainable investment is generally known for its application in public markets, this master thesis is devoted to the question of what contribution private markets can make in this area. Existing academic literature is mainly concerned with the efficiency dimension of sustainable investment, measured in terms of returns, whereas this thesis addresses the aspect of effectiveness. The aim is to clarify the hypothesis whether certain characteristics make private markets better suited to the needs of sustainable investment than public markets. In addition, a practical example shows how an established private market asset manager can launch a fund that is dedicated to sustainable investments. First, the evolution of sustainable investment is examined more closely. This shows that investors who consider sustainability aspects, generally pursue the same goals as other investors, but actively include this aspect when making investment decisions. An analysis of current data indicates that the overall growth of such sustainable strat-egies continues steadily, although in relative terms this is most pronounced in strate-gies that may be directly related to private markets. Consequently, the focus is on the development and characteristics of private markets, which have created the favorable conditions for the consistent pursuit of sustainable investment strategies on a large scale. Given the importance of institutional capital, it is essential that large amounts of capital can be absorbed and deployed in a goal-oriented manner, if sustainable strategies are to be pursued actively. In this respect, it becomes apparent that it is due in particular to the institutionalization which has shaped private markets in recent years and continues to do so, that institutional investors are increasingly able to make consistent use of alternative asset managers for the implementation of sustainable investment strategies. In addition, the effects of the shrinking universe of public stocks, shortcomings of ESG screening in public markets, the dilemma of short-termism, and the effect of governance structures on the suitability for sustainable investments are examined. It should be noted that many phenomena lead to the con-clusion that public markets alone cannot be optimal for implementing sustainable investment strategies for institutional investors in a meaningful way in the long run. Rather, private markets in their current form offer previously untapped opportunities and significantly expand the investment universe in terms of sustainable investments. In this respect, it is essential that sustainability oriented investors maintain their good ambitions in public markets, but at the same time recognize private markets as an opportunity to implement their strategy consistently and effectively. Based on these findings, a real-life case study illustrates how an established manager of private market investments, which has undergone the aforementioned institution-alization, can design and launch a private markets fund focused on sustainable in-vestments. This involves assessing customer demand, systematically integrating sus-tainability aspects into the unique private markets investment process and clarifying the positioning and choice of the fund model before finally launching such a product.
Export BibTeX