ABSTRACT Private equity (PE) firms increasingly integrate environmental, social, and governance (ESG) factors in investment decisions and raise impact funds to address sustainability challenges. We review and integrate the growing body of literature on why, when, and how PE fund managers incorporate ESG factors into their investment strategies and practices. Specifically, we develop a novel analytical framework that connects: (i) external antecedents, (ii) internal antecedents, (iii) ESG integration practices , and (iv) financial and nonfinancial outcomes . Our framework shows that while prior research analyzed external antecedents and integration practices in depth, much less attention has been given to internal drivers and to systematic evidence on ESG‐related outcomes. The framework synthesizes existing knowledge and visually maps mature, fragmented, and understudied areas of research. Accordingly, we propose pathways for advancing scholarship on ESG integration in PE and offer practical guidance for investors and policymakers on how to target both financial and nonfinancial performance.
Molenaar et al. (Sun,) studied this question.