Bad Assets and Bad Owners?

Executive Summary

• Concerns have been raised that the sale of polluting power plants to private equity funds, not subject to public reporting requirements, has an adverse environmental impact

• However, lack of public reporting obligations does not equate to lack of scrutiny, as large investors have a well-documented interest in good ESG practices

• The academic literature does support the hypothesis that publicly listed owners of polluting assets seek to divest these to appease shareholder pressure, and that such assets are likely to land in the hands of less transparent owners

• Importantly, sales to private equity ownership are not associated with detrimental environmental outcomes