Private equity ups ESG commitment

LGT Capital Partners report finds increasing ESG focus from alternatives managers

The proportion of private equity managers assessing and measuring climate-related risks has risen by 12 percentage points to 55% over the last year, according to LGT Capital Partners.

The firm’s annual ESG Report analyses the activities of 381 managers (including 309 private equity managers) globally, to assess improvements to ESG practices.

The report revealed that Europe continues to lead on ESG integration: 82% of European private equity managers were ranked ‘excellent’ or ‘good’ for their ESG approaches, compared with 79% for Asian managers and 49% of US managers. 

The Switzerland-based alternative investment specialist also found that 81% of private debt managers are now assessing their own carbon emissions, up 24 percentage points from last year.

It said hedge fund managers demonstrated progress too, with the proportion of firms rated excellent or good up to 69% from 64% last year. LGT added this was most likely driven by increasing regulatory requirements and investor demand, although all managers demonstrated some commitment to ESG and recognised sustainability-related risks. 

Commenting on the survey findings, Tycho Sneyers, a managing partner at LGT Capital Partners and PRI board member, said: “There has been significant progress in how alternative investment managers approach ESG issues in recent years, and this is a trend that has continued over the past 12 months. This shift has been largely supported by regulators demanding greater clarity on how ESG is defined and applied, particularly the implementation of SFDR, which is the most wide-ranging ESG regulatory framework currently implemented.”