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Buyout Giants Rebrand as Forces for Good While Seeking Profits

Private equity funds are touting investments that can help the environment and society, but the impact is hard to measure.

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Illustration: Baptiste Virot for Bloomberg Businessweek

Decades after the leveraged-buyout industry rebranded itself as private equity, private equity is rebranding as the next big thing in green and socially minded money management. While some see this as a way to put a kinder, gentler face on a famously aggressive business, investors have been pouring billions of dollars into funds that aim for a positive impact beyond financial return.

A record 132 “impact” funds have started this year, according to data from Preqin, which tracks the industry. The category has amassed $20 billion since 2015, data compiled by Bloomberg show. Impact funds often target investments in renewable energy, health care, affordable housing, or other socially important industries. More broadly, many clients want firms to consider ESG criteria, the industry shorthand for a company’ environmental, social, and governance practices.