Stop talking about polar bears. Talk about EBITDA

When I opened a Business Ethics debate last year the question was simple: can private equity build profitable businesses that deliver for people and the planet? I said yes. I’d say it again. But the case looks different now, and not entirely in the direction I’d like.

The economics have held. What’s slipped is commitment. ESG has become a contested word, and in my own sector the latest data shows some boards reversing progress on gender balance.

I should declare my bias. I’m a portfolio Chair and NED of private equity backed businesses. Before that I spent my career in commercial roles building customer propositions, including for sustainable products, leading three domestic energy retailers as CEO. I was the only female CEO through the energy crisis. And I hold strong views on delivering Net Zero in a fair and just way.

So here’s the case again, updated. No polar bears, no ice caps. Let’s talk about EBITDA.

The cynic’s case deserves a straight answer

For decades, profit and ethics have been framed as a trade-off. The cynic’s case against private equity is easy to make, and it isn’t a stupid one.

• Short-termism. The traditional PE model is built on rapid value extraction. Deep sustainability change is slower and systemic.
• Greenwashing. As ESG became fashionable, the temptation to overstate effort without measurable impact grew. That erodes trust and stalls real change.
• Cost and complexity. Credible measurement across a diverse portfolio needs specialist expertise, standardised reporting and real money.

The sharpest version is one question: why commit capital to a long-term strategy when the plan is to sell in three years?

Because the next buyer pays for it

The three-year horizon isn’t the problem, it’s the mechanism. A PE owner doesn’t need to wait 20 years for sustainability to pay back. It needs the next buyer to believe the business is more resilient, more efficient and better positioned than its peers, and to price that in.

The PRI’s Sustainability Value Creation framework, built with Bain & Company and NYU Stern’s Center for Sustainable Business from the experience of more than 400 investors, put numbers on it. Strong sustainability practice can drive around a 6% revenue uplift, a 6–7% uplift in exit multiples, and a lower cost of debt.

That changes the question. It’s not “can we afford to do this in a three-year hold?” It’s “can we afford to arrive at exit without it?”

Three reasons the economics now favour action

1. The growth is in the transition

In October 2025, Lord Nicholas Stern argued that fossil-fuelled growth is futile, because the climate damage it causes ends in self-destruction. In his view, climate investment is the economic growth story of the 21st century, the green equivalent of the industrial revolution.

The hard numbers back him. In 2024, 91% of new utility-scale renewable projects produced power more cheaply than the cheapest new fossil alternative. Utility-scale battery storage costs have fallen 93% since 2010 (IRENA, 2025). For PE, the E in ESG is still about mitigating risk. But it’s increasingly about owning the technologies and services that will dominate the next few decades.

The part I find most compelling is productivity. Stern argues the transition creates healthier, more productive societies, with cleaner air and more efficient use of resources. If there’s one thing PE understands, it’s productivity. If you accept that argument, you invest where the growth is.

2. Diversity performs

The S and G are where I see the most underestimated value, and where my own sector is stalling. The latest POWERful Women State of the Nation report, which I Chair, found women holding 31% of UK energy board roles. But 22 boards removed at least one woman in the past year, up from 5 the year before, and 13 companies now have all-male boards. The sector is veering off track for our target of 40% women in leadership by 2030.

That matters commercially, because the wider evidence links diverse leadership to performance:

• Profitability. Companies in the top quartile for gender diversity on executive teams are 39% more likely to outperform financially than those in the bottom quartile, up from 15% in 2015 (McKinsey, 2023).
• Innovation. Across 1,700 companies, those with above-average leadership diversity earned 45% of revenue from new products, against 26% for the rest. EBIT margins were 9 points higher (BCG, 2018).
• Resilience. Research led by Professor Nick Wilson at Leeds University Business School found that having at least one woman director was associated with around a 20% lower risk of insolvency.

These are correlations, not proof of cause. When academics tried to replicate McKinsey’s findings on ethnic diversity across the S&P 500 in 2024, they found no significant link (Green and Hand, Econ Journal Watch). That’s why the mechanism matters more than any single number. Diverse teams challenge groupthink and make better-tested decisions, which is exactly what managing the complex risks of the energy transition needs. For PE, strong social and governance practice also widens the talent pool and builds brand resilience. Both show up in the valuation at exit.

3. PE is built to do this

The Sustainability Value Creation framework makes a point the cynics miss. PE’s ownership model is an advantage here, not an obstacle.

PE firms have active ownership and real control. They can embed sustainability across the whole investment cycle, not just report on it. Value shows up in two places:

• Cost. Data-driven operational efficiency and targeted programmes, such as energy and waste reduction, cut impact and improve margin at the same time.
• Revenue. Growing demand for sustainable products, cross-market synergies, and new offers through cross-sell and diversification.

A listed company has to persuade thousands of shareholders. A PE-backed board can decide on Tuesday and act on Wednesday.

What it actually takes

The economics, the evidence and the operating model are all there. In my experience, two things decide whether they turn into results.

Leadership commitment: It has to come from the deal team and senior leadership, not be delegated to a sustainability lead three layers down. If it isn’t in the value creation plan, it isn’t real.

Robust data: You need systems that track sustainability metrics and financial metrics side by side, so you can prove the link between them. Without that, you’re asking the next buyer to take it on trust. That’s the gap where greenwashing lives.

What I’d tell the room now

If I joined that debate again and gave my opening speech now I’d change the ending. I closed on the idea that our values have become a source of financial value. I still believe it. But a belief won’t survive a downturn or a sceptical investment committee. Evidence at exit will.

So my challenge to PE boards is narrower and harder. Put sustainability in the value creation plan. Track it next to the financials. Be able to show the next buyer what they’re paying for. If you can’t, you’re not doing ESG. You’re doing PR.

On diversity, the State of the Nation numbers are a warning. Twenty-two energy boards removing a woman in a single year isn’t a pipeline problem. It’s a choice, and boards should be asked to explain it.

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