Almost half (47%) of Private Equity fund managers now take climate change into account in their ESG policies. This is the finding of a study conducted by alternative investment group LGT Capital Partners, which notes a real progression, since only 34% were concerned about these issues in 2021.
Investment fund managers are focusing more on climate risks and greenhouse gas emissions within their portfolios.
The proportion of managers assessing climate risks has also risen significantly (from 32% in 2021 to 43% in 2022), while the number of managers monitoring greenhouse gas emissions has also increased (40%, up from 28% in 2021).
The study reveals that Europe remains in the lead when it comes to ESG integration, with 84% of Private Equity fund managers rated as "excellent" or "good" for their approach, compared with 70% in Asia and 50% in the USA.
However, over the past five years, Asia has seen the biggest increase in ESG integration, with a 20% rise in the number of managers rated "excellent" or "good".
Around 50% of European Private Equity fund managers have implemented a climate change approach, as have 40% of Asian managers.
The survey, which analyzed 392 managers worldwide, also revealed signs of improvement in the area of diversity and inclusion (D&I). The majority of managers in the Private Equity sector (60%) now have a D&I policy in place (an increase of 10% over the last 12 months).
Of the managers who have implemented the EU Sustainable Finance Disclosure Regulation (SFDR), 23% have classified their latest funds in the Article 8 category, i.e. funds that promote environmental and/or social features. This is notably the case for Vintage Altaroc Odyssey 2023.
Some 7% of managers classified their funds in the Article 9 category, i.e. funds whose objective is sustainable investment or the reduction of carbon emissions.
When asked about the launch of new funds, Private Equity fund managers indicated that the number of SFDR Article 8 and Article 9 funds should double in the next generation of funds.
Tycho Sneyers, Managing Partner at LGT Capital Partners, commented: "Over the past 20 years, since we began analyzing ESG activities, we have seen clear and significant progress in the way managers are addressing ESG issues. This is particularly reflected in areas such as climate change, social and environmental responsibility and the continuing trend towards results-based approaches, where we see managers integrating ESG aspects into their activities."
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