Nearly three quarters of private equity managers have ESG processes in place – almost three times the proportion seen 10 years ago, according to a new survey by LGT Capital Partners. The survey of 300 general partners and 1,800 portfolio companies found that 73% of surveyed firms had “robust ESG processes” in place, compared to 27% in 2014. Over the past year, 33 private equity managers have significantly improved their ESG efforts, resulting in improved ratings, said LGT. However, the study showed the percentage point increase had stagnated on previous years – a trend attributed to “challenges of improving further on already advanced baselines and the increasing complexity of ESG”. LGT also said this may be due to a shift from “pledges to actions”. European funds led the way, with 51% now rated as “excellent” on ESG processes. In Asia, the figure was 34%, and in the US – a paltry 16%. Climate also remained the top priority among ESG topics, but diversity, equity and inclusion (DEI) processes have also improved across the board. “ESG practices significantly enhance commercial value by aligning portfolio companies with industry transitions toward net zero, securing advantages through proactive regulatory compliance, and improving operational efficiency, talent acquisition and customer engagement – thereby increasing market share and competitive positioning,” said Tycho Sneyers, Managing Partner at LGT Capital Partners and Board Member at the Principles for Responsible Investment.
