Sustainability Management in Private Capital Markets: Important and Distinct, yet Underexplored-Institutional Pressures, Legitimacy, and ESG Disclosure

Abstract

The rapid expansion of sustainable finance has intensified demands for consistent sustainability disclosure across global capital markets. While public market actors and listed corporations have received significant scholarly attention, private capital markets, particularly private equity, remain comparatively underexamined despite their growing influence in global investment flows. This dissertation investigates how sustainability management and disclosure practices are emerging within private capital markets and how private equity actors respond to evolving institutional pressures shaping environmental, social, and governance (ESG) reporting. Drawing on institutional theory, legitimacy theory, and sustainability management literature, the dissertation explores three interconnected dimensions of sustainability integration in private capital. The first paper presents a systematic literature review of sustainability research within private capital investing, identifying a substantial gap between the rapid growth of ESG practices in industry and the limited academic attention devoted to sustainability within private equity and venture capital research. The review reveals that sustainability-related scholarship constitutes a very small proportion of the broader private capital literature and highlights several emerging thematic areas requiring further investigation. Building on this foundation, the second paper examines ESG reporting practices among leading global private equity firms through a comparative analysis of ESG reports and Sustainable Development Goal (SDG) integration strategies. The findings suggest that while sustainability commitments are increasingly communicated within ESG disclosures, much of the integration appears to function as legitimacy signaling rather than deeply embedded investment decision-making processes. The third paper extends the analysis to the evolving institutional landscape of global sustainability disclosure by examining comment letters submitted by financial institutions and private equity firms in response to the International Sustainability Standards Board’s (ISSB) consultation on agenda priorities. Using a mixed-method approach combining thematic interpretation and structured content analysis, the study identifies patterns of institutional isomorphism and dissonance within the consultation process. While financial institutions and private equity actors demonstrate convergence around biodiversity and climate–nature disclosure priorities, significant divergence emerges regarding the role of integration in sustainability reporting, reflecting distinct institutional logics within the financial sector. Taken together, the findings illustrate how private capital actors both conform to and shape emerging sustainability management frameworks in the form of selective institutionalization. The dissertation contributes to scholarship by expanding understanding of sustainability integration within private capital markets, highlighting the role of institutional pressures in shaping ESG disclosure practices, and introducing private equity as an important and distinct, yet underexplored actor in global sustainability reporting debates.