LGT Capital Partners say that ESG quality within private equity has risen sharply.
LGT’s latest ESG report includes an assessment of 251 private equity managers which shows the number of private equity managers ranked ‘excellent’ or ‘good’ on ESG integration has increased by 78% since 2015, with 81% of European managers now ranked in these categories. Asia show improvements, with 63% of managers now ranked ‘excellent’ or ‘good’, while the US (43%) continues to lag.
LGT also finds that 42% of its private equity managers incorporate diversity and inclusion into their investment decision-making, while 23% have a framework in place for addressing climate change. Furthermore, the report shows that 47% of LGT private debt portfolio companies assess their carbon emissions, which represents a five-fold increase since 2016. Meanwhile, 17% of hedge fund managers are rated ‘excellent’ or ‘good’ on ESG, which indicates that ESG integration in hedge funds is still in a very early stage, the firm says.