Public companies, due to their large market presence and mandatory financial disclosures, often receive a lot of attention on the Internet. Their operations and regulatory obligations put them under a media spotlight, which amplifies any ESG controversies they face in public and online discussions. In contrast, private companies operate with a higher degree of discretion and are generally less exposed to intense external scrutiny.

Although private companies are less visible to the public, there is still an underlying interest and, more importantly, a need to understand the nature of ESG controversies they face. Are these controversies different in any way, such as being less significant or having unique characteristics? This raises questions about whether certain types of risks are more susceptible to controversies in the private sector. When comparing prominent public companies with their private counterparts, do controversies differ within the same industry?

ESG Overview

In exploring the ESG landscape, a compelling comparison emerges between private and public companies. Public companies predominantly grapple with environmental and social risks. On the other hand, private companies, especially in the financial sector, are more frequently embroiled in governance-related controversies. This section highlights the ESG challenges each sector faces and the varying degrees of visibility and scrutiny these issues receive in the public and private domains.

Within the fossil fuel industry, a distinct difference emerges: public companies are predominantly associated with environmental and social risks, while private companies face more governance-related issues.

This disparity is partly due to the more visible and significant environmental impacts often linked to public companies, such as BP's gasoline spill cleanup in Washington state and the devastating impacts of Shell's oil spills in Nigeria. Public companies also tend to experience more social issues, like employee strikes, protests, and human rights infringements.

In contrast, private companies, particularly in the financial sector, show a higher frequency of governance risks. Examples include controversies surrounding FTX and Binance, highlighting issues like corruption, substantial fines, and money laundering allegations. This trend mirrors the earlier observation in the fossil fuel sector, where private companies, despite fewer controversies, experience more pronounced impacts when significant ESG issues arise.

It's noteworthy that private sector controversies, due to their relatively lower level of scrutiny, can gain significant traction and visibility when they do surface. This differs from the public sector, where the constant exposure to ESG risks leads to more frequent detection but not necessarily the same level of virality for each event. Public companies regularly encounter ESG risks, but the prevalence of such issues in their operations means that individual events may not always attain widespread attention.

ESG Deep-dive

Environmental risks deep-dive

Looking at environmental risks, public companies often face significant issues like emissions, climate change, and water pollution, while private firms encounter these challenges on a smaller scale and with different focuses, such as animal cruelty and environmental strategy.

In the Consumer Discretionary sector, both types of companies encounter environmental risks, but the nature of these risks differs. Public companies, particularly in the automotive industry, are often involved in incidents like fires and lawsuits related to harmful emissions. Private companies, while also dealing with fires and automotive issues, face additional problems like animal cruelty allegations in retail.

The Fossil Fuel sector shows a clear distinction in ESG issues. Public companies frequently face controversies related to climate change and atmospheric pollution, often involved in significant incidents like legal actions and fines. Private companies, on the other hand, are more focused on general environmental strategy, though their controversies tend to be of a smaller scale.

In Utilities, public companies are more involved in water pollution controversies, with significant incidents like fines for unlawful water extraction making headlines. Private companies, while also dealing with water pollution, do so less frequently and on a smaller scale.

The Financial sector reveals that public companies, especially banks and financial services, are closely linked to the fossil fuel industry. This association has led to various controversies, including greenwashing accusations and involvement in ESG probes.

The Healthcare sector, particularly in public companies, shows a focus on biodiversity-related controversies. Issues like animal cruelty in biotechnology are prominent.

Overall, public companies tend to be at the center of more significant and high-profile environmental controversies, particularly in sectors like fossil fuels, utilities, and financials. Private companies, while also facing environmental and ethical challenges, often do so on a different scale, indicating different approaches and impacts in their management.

Social risks deep-dive

Public companies across sectors like Consumer Discretionary, IT, Financials, and Fossil Fuels frequently confront a broad spectrum of social risks, including human rights breaches and human capital concerns. Private companies, while also facing these issues, tend to have a more focused approach, with specific concerns in areas like telecommunications, social media, and health & safety. This indicates differing strategies and impacts on their social management.

Public companies in the Consumer Discretionary sector struggle with a substantial volume of data related to human rights breaches and human capital issues. These challenges are widespread across various industries, with incidents in telecommunications, social media, and the automobile industry being particularly noteworthy. In contrast, private companies in this sector primarily confront human rights breaches, with a significant focus on issues within telecommunications and social media. This contrast indicates a more specialized concern for private companies in this sector.

Both public and private companies in the Information Technology sector experience significant risks related to fundamental human rights breaches and human capital concerns. However, public companies, particularly those in software and hardware, are more frequently linked to these issues. Private companies, while also implicated, tend to have a different focus within the same concerns.

In the Financial world, public companies exhibit a pronounced focus on human capital issues, surpassing their private counterparts. This focus spans the banking and insurance industries with notable instances of discriminatory dismissals and wage disputes. Additionally, public companies in this sector also navigate complexities related to human rights and customer relations, including racial discrimination lawsuits and data breaches. Conversely, private financial companies face significant customer relations issues, especially highlighted in financial services, and human rights concerns, such as charges against Binance for child pornography and terrorism financing.

Private companies in the Consumer Staples sector lead in mentions related to health and safety, particularly in the Food/Beverage and tobacco manufacturing industry. These references often involve serious incidents like industrial accidents and lapses in COVID protocols. Additionally, customer relations issues are slightly more pronounced in private companies compared to their public counterparts. Public companies, meanwhile, have a slightly higher proportion of mentions related to human rights risks, including labor law violations and privacy concerns.

Public companies in the Fossil Fuel sector are notable for their focus on human capital issues, with references to industry-wide strikes and layoffs. In contrast, private companies in this sector demonstrate a significant focus on human rights issues, as exemplified by the case of the ex-Citgo CEO.

A divergence is seen in the Basic Materials sector, where private companies face more prevalent human capital issues, particularly in mining & metals and the chemical industry. Public companies, on the other hand, encounter a higher proportion of human rights breaches, including harassment lawsuits and violations of indigenous rights.

In summary, public companies across these sectors tend to face a wider range of social controversies, encompassing both human rights and human capital issues, often on a larger and more varied scale. Private companies, while also dealing with similar challenges, tend to do so with a more specific focus, suggesting different approaches and impacts in their social management strategies.

Governance risks deep-dive

In scrutinizing governance, we found that public firms face risks in management and governance, while private entities encounter issues like anti-competitive practices and corruption. Financial and Industrial sectors see public companies dealing with strategy and compliance challenges, whereas private firms face tax strategy risks. Overall, public companies are more involved in high-profile governance controversies, while private companies focus on specific areas like tax and anti-competitive behavior.

In the Consumer Discretionary sector, governance issues vary notably between public and private entities. Public companies, particularly in telecommunications and Social Media, encounter significant risks in senior management and governance structures, evidenced by legal actions and allegations against companies like Verizon and Ericsson. Conversely, private companies in Media & Entertainment are more embroiled in anti-competitive practices, as highlighted by Epic Games' antitrust trial against Google.

Information Technology presents a clear distinction. Private companies are frequently linked to substantial corruption issues, with the FTX scandal serving as a prime example. Public companies, on the other hand, are more inclined towards engaging in anti-competitive practices, as seen in the cases of technology giants like Google and Microsoft facing antitrust lawsuits and scrutiny for monopolistic behavior.

In the Financials sector, governance risks are predominantly tied to senior management and corporate structure. Public companies face challenges primarily in their influence on strategy and communication, with notable instances including BlackRock's lawsuit over an alleged misleading ESG strategy. Meanwhile, prominent financial services companies like PayPal have faced regulatory scrutiny, further illustrating the sector's vulnerabilities.

The Industrials sector shows similar trends among public and private companies but with a specific emphasis on tax strategy risks in private firms. This is exemplified by the PwC tax leaks scandal, indicating the deep impact of governance issues in private entities.

In the Fossil Fuels sector, corruption issues are more pronounced, especially among privately-held companies. Incidents such as the lawsuit against Citgo and the Amec bribery case settlement underscore the sector's susceptibility to governance-related controversies.

Lastly, the Utilities sector shows a higher prevalence of corruption among public companies, as demonstrated by the investigation into FirstEnergy's public corruption scandal and subsequent legal actions.

Overall, governance risks manifest differently in public and private companies across various sectors. Public companies are often at the forefront of high-profile governance controversies, dealing with issues related to management, strategy, and regulatory compliance. Private companies, while also grappling with governance challenges, tend to face issues like anti-competitive practices and tax strategy risks, reflecting a variance in operational focus and impact on governance risk management.

Conclusion

By diving into the complexities of ESG, both public and private sectors have a unique opportunity not only to enhance their financial performance but also to drive positive societal and environmental impacts. As we further examine corporate controversies and gain a deeper understanding of the nuances within the ESG landscape, it becomes increasingly clear that a commitment to these principles is essential for long-term success and global well-being. Our journey highlights the tremendous potential for positive change when corporations embrace the pressing demands of today's ESG landscape, paving the way for a more sustainable, equitable, and governance-focused world.

Download the full report to discover how different sectors navigate regulatory pressures and sustainability challenges with real-world examples to guide your strategy.

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TextReveal’s web data analysis of over five million public and private companies is essential for keeping tabs on ESG investment risks. To learn more about how you can analyze web data or to request a demo, reach out to one of our representatives.

Screening a portfolio for controversial business involvement is fundamentally different in public markets than in private markets. Public assets benefit from established disclosure requirements, third-party coverage, and standardized data, while private assets operate in a far more opaque environment. For ESG teams at LPs and GPs, these differences become especially acute in secondaries transactions, where investors inherit portfolios they did not originate and must assess risk under tight timeframes.

As regulatory frameworks such as SFDR extend similar expectations to private market funds, the gap between public and private screening becomes harder to ignore. Investors are increasingly expected to apply consistent exclusion policies and demonstrate rigorous screening across asset classes, even when data availability, transparency, and control differ materially.

This article examines the practical challenges of screening secondaries portfolios across public and private markets. It highlights where traditional approaches fall short, explores the structural constraints faced by LPs and GPs, and illustrates how hidden exposure can persist in private assets through the case of Crown Resorts and its governance and gambling-related controversies.

Data Availability and Transparency

Public companies typically provide more data through annual reports, revenue disclosures, and ESG rating coverage. For example, a company like Philip Morris International openly reports that almost 100% of its revenue comes from tobacco, making exclusion straightforward. That said, public market screening still relies heavily on self-reported information, which has its own limitations.

Private companies, by contrast, often disclose little to nothing about their business mix. A mid-market private firm may provide no public indication of its activities at all. As a result, GPs have traditionally relied on questionnaires, web searches, and due diligence calls to identify “sin” activities, a manual and imperfect process. Because private companies have no obligation to report controversial involvement, issues may surface only after investment. This opacity places pressure on GPs to demonstrate robust screening, particularly for SFDR Article 8 and 9 funds expected to apply comparable rigor to private assets without comparable data.

Coverage by Third-Party ESG Providers

Public markets benefit from broad coverage by ESG data and controversy research providers that maintain structured involvement lists across sectors such as weapons or gambling. Private markets face a clear coverage gap. LPs cannot assume that external ratings or datasets will flag problematic private companies.

This gap is particularly material for activities more prevalent in private markets, such as predatory lending or adult content platforms,  which are rarely publicly listed. Traditional ESG datasets may miss these exposures entirely. Without alternative data sources, an Article 8 private debt fund could unknowingly finance a highly controversial company simply because it does not appear on any public exclusion list.

LP/GP Constraints and Mandates

Many LPs maintain their own exclusion policies and expect GPs to apply them consistently. In public markets, asset owners can screen holdings directly. Whereas, in private markets, LPs must rely on GPs to implement exclusions during sourcing and due diligence.

This reliance creates friction. A financially attractive deal may still be incompatible with LP mandates, forcing GPs to walk away. Under SFDR, GPs marketing Article 8 or 9 funds must demonstrate that portfolio companies align with promoted ESG characteristics, including exclusions for sectors such as weapons or tobacco. LP due diligence questionnaires increasingly reflect this scrutiny.

Secondaries investors face additional pressure. They must assess large portfolios they did not originate, often under tight timelines. Hidden exposure, such as sanctioned entities or controversial manufacturers, can pose a significant risk, driving increased use of accelerated ESG screening tools prior to acquisition.

Dynamic vs. Static Nature of Private Investments

Public market portfolios can be adjusted quickly if a controversy emerges. In private markets, investors are typically locked in for years, making pre-investment screening far more critical. A failure to identify controversial involvement can leave GPs choosing between remediation efforts and reputational damage.

Private companies also evolve with limited visibility. A business may pivot into controversial activities without public disclosure, and such shifts may only be detectable through external reporting rather than formal announcements. This reinforces the need for both rigorous upfront screening and ongoing monitoring throughout the holding period.

Case Study: Crown Resorts - Gambling and Governance Failures

Company Overview

Crown Resorts is Australia’s largest casino operator, running flagship properties in Melbourne, Perth, and Sydney. Its business model centers entirely on gambling & betting, making it a textbook case of significant involvement - essentially 100% exposure to an exclusion category that many funds ban or cap at ≤5–10% of revenue. Following a string of governance scandals, Crown was acquired by Blackstone in 2022 and delisted, offering a strong private-market example of why business involvement screening must extend beyond public companies.

Controversies SESAMm’s AI screening captures a sequence of serious ESG and regulatory failures:

• International illegality: 2016 arrests of 18 employees in China for promoting gambling in violation of Chinese law.
• Money laundering & crime links: laundering through casino accounts and continued partnerships with junket operators later tied to organized crime.
• Regulatory sanctions: inquiries in New South Wales, Victoria, and Western Australia declared Crown “unsuitable” to hold licenses; regulators imposed monitoring and fines totaling A$200 million+.
• Predatory behavior: evidence of loan-sharking within casino premises, and failure to protect patrons from exploitation.
  

Screening Outcome

Crown is classified as significant involvement in Gambling & Betting, with additional flags under Sanctions & Exclusions. It also shows limited exposure to predatory Lending and minor environmental issues.

Screening Takeaway

Crown demonstrates how a company’s core business model (gambling) can intersect with multi-dimensional ESG risks (AML, governance, and social harm). In private markets, where disclosures are minimal, AI-driven screening enables investors to detect red flags early, determine whether engagement or exclusion is appropriate, and avoid inheriting reputational or regulatory liabilities.

SESAMm’s AI Technology Reveals ESG Insights

Discover unparalleled insights into ESG controversies, risks, and opportunities across industries. Learn more about how SESAMm can help you analyze millions of private and public companies using AI-powered text analysis tools.

BNP Paribas has passed a significant milestone in its energy financing strategy, with more than 80% of its energy production financing now directed toward low-carbon energies.

The increase marks a notable acceleration compared with previous periods. Low-carbon energy financing accounted for approximately 65% of BNP Paribas’ energy production exposure in 2023, rising to around 76% in 2024, before surpassing the 80% threshold in 2025. The category includes renewable energy sources such as wind, solar and hydropower, as well as nuclear energy, which the bank classifies as low-carbon.

At the same time, BNP Paribas has continued to reduce its exposure to fossil fuel energy production. Credit exposure linked to oil and gas projects has declined as financing volumes for renewables and other low-carbon technologies increased, reflecting the bank’s longer-term commitment to rebalancing its energy portfolio in line with climate objectives.
Beyond energy production financing, the bank has also reported progress against its broader transition finance ambitions. By the end of 2025, BNP Paribas had mobilized more than €250 billion in financing supporting the low-carbon transition, exceeding its initial €200 billion target ahead of schedule. The bank has since confirmed updated objectives, including a target to reach 90% low-carbon energy financing by 2030.

While the figures relate specifically to energy production financing exposure, rather than BNP Paribas’ total lending activity, they nonetheless highlight the pace at which large financial institutions are reshaping their energy strategies. As regulatory scrutiny, investor expectations, and transition risks continue to intensify, the composition of energy financing portfolios is increasingly viewed as a key indicator of alignment with long-term climate goals.