By Anna J. ParkEnvironmental, social, and corporate governance (ESG) themed investing is increasingly becoming the norm in private equity financing (PEF), as a growing number of limited partners ― investors in a fund ― emphasize its criteria in measuring the sustainability and social impact of an investment in a company or business. Investment portfolios that are not run on ESG principles are finding it more difficult to attract large investments, particularly from major players, including global institutional or state-run investors.STIC Investments, a PEF based in Korea covering the Pan-Asia region, said it has been applying ESG principles to every step of attracting investors to its latest “strategic blind fund.”Its STIC Global Innovative Growth Fund is seeking 600 billion won ($532 million) from investors and its bylaws and regulations clearly state the obligation to assess investments according to ESG principles.The PEF firm selected Samil PwC last month as an advisory body for ESG implementation, and has been receiving related consultations regarding its fund management. Of the 600 billion won target, STIC Investments has attracted about 414.5 billion won from major limited partners, including the Korea Development Bank (KDB), K-Growth and the Export-Import Bank of Korea. The remainder is expected to be met sometime within the third quarter this year. STIC Investments is not an exception in the local PEF industry that is emphasizing ESG investments.IMM PE recently announced it will strengthen ESG investments, after the firm joined the U.N.-led principles for responsible investment, or PRI, earlier this month. The firm will partner with PwC Consulting and Deloitte Anjin to implement ESG criteria when it comes to investment evaluations and business surveys. MBK Partners, Korea’s first signatory to the PRI, is also focusing on ESG in its investment portfolios; while KTB PE conducted a business survey according to ESG rules.PEFs adopt ESG rules to attract more investors Market watchers say one of the key reasons is that they aim to attract money from major investors, such as the National Pension Service (NPS), which has started to place a greater emphasis on ESG in its investments.The country’s largest institutional investor with over 800 trillion won worth of assets under management, said late last year that it will increase the portion of these abiding by ESG regulations to up to 50 percent by the end of 2022. The NPS has also begun applying ESG strategies to overseas stocks and local bonds since the start of the year. “As major institutional investors increase the significance of ESG evaluations in their assessments, PEF firms are also emphasizing these criteria in investment decisions to attract them,” a market insider said.