Private Equity Wants You To Feel Good About Investing

AT LESS THAN 3 inches long from head to tail, the dunes sagebrush lizard is in the running for meekest creature on earth.

- Melissa Mittelman

The tiny reptile lives on land in West Texas where Vista Proppants & Logistics Ltd. was looking to build a sand mine. Vista is owned by a private equity firm, First Reserve Corp., based in Greenwich, Conn., and a casual observer of last year’s stare-down between the masters of the universe and the lowly lizard might have figured the next step would be bulldozers. The sand was of the highest quality, and the lizard, even though it’s been found in only 11 counties in Texas and New Mexico, was prolific enough to stay off any endangered or threatened lists. What Vista did next may be surprising. The miners worked with local conservationists to make sure as few lizards as possible were harmed in the digging of their sand pit.

Altruism? Maybe not. If Vista and First Reserve had come heavy, they’d doubtlessly have had to deal with lawsuits, habitat mitigation, and media reports portraying them as villains. By engaging with conservationists, Vista mitigated risk. And by mitigating risk, Vista was making a smart business decision.

More and more private equity firms have been working to prove a thesis that you can do well by doing good. Blackstone Group LP has a team headed by its chief sustainability officer, Don Anderson, that works with portfolio companies such as Equity Office Properties Trust and Hilton Worldwide Holdings Inc. to turn off lights in empty hallways, control room. temperatures, and reduce water use. The idea is to save money by saving natural resources. KKR & Co. works with nonprofits including the Environmental Defense Fund to improve environmental, social, and governance-related practices at portfolio companies, focusing on operational changes. London-based Cinven Ltd. requires companies it controls to report quarterly on metrics such as employees’ work-related illnesses, inclusion, and diversity.