Alternatives specialist KKR has said a global shortage of skilled managers to run industry-leading companies is the latest major governance risk facing investors.

In its eighth annual Environmental, Social, Governance and Citizenship Report, the investment manager added ‘The Talent Puzzle’ to five other ESG themes of focus.

In its observation notes, the investment group noted that “an ageing – and thus retiring – workforce in much of the United States, Europe and parts of Asia, coupled with deficiencies in the experience, education and technology-based skills of current job seekers, has created a shortage of talent for companies.”

In 2017, KKR hired a consultancy group to develop an “inclusion and diversity questionnaire” to gather baseline information about the recruitment and retention practices at the companies in which it invests.

In today’s updated report, the group said that companies should address the issue posed by a global talent shortage, by investing in professional development and embracing diversity.

This addition to the company’s ESG priorities joins recognised themes such as climate change, agriculture, resource shortages, infrastructure and the treatment and prevention of disease, on the group’s areas of focus for the coming year.

“We see both opportunities and risks on the horizon and proactively partner with our portfolio companies to thoughtfully manage them,” said Elizabeth Seeger, director of Sustainable Investing at KKR.

“Our understanding of how ESG issues can drive value helps us invest responsibly while also producing better outcomes for our clients, companies and communities.”

The full KKR report is available here.