PwC says more ESG PE investing planned

A new survey by PwC Luxembourg shows that investors are planning to increase their ESG private equity fund commitment in the coming years.

PwC says the survey entitled “GPs’ Global ESG Strategies: Disclosure Standards, Data Requirements & Strategic Options”, highlights some of the key trends, opportunities and challenges in the private equity industry.

PwC surveyed 300 limited partners and 300 general partners across Asia, UK and US to get their views on the various regulatory initiatives in the sustainable finance place and the results reveal some interesting findings, including:

• Increased commitment to ESG – 87.5% of LPs we surveyed are planning on increasing their PM ESG investments over the coming two years – with over a third targeting increases of more than 20%. Asset Managers are responding, with 86.5% of those surveyed planning to expand their ESG PM offering over the coming 24 months in order to grasp this demand – of which almost half are planning to expand their ESG product shelves by over 20%.

• Sentiment towards EU Regulation – 60.5% of EU LPs surveyed described themselves as (very) satisfied with developments in EU regulation, closely followed by GPs with 57.1% on average being (very) satisfied with the impacts generated by ESG regulation. Interestingly, 63.8% of EU LPs are satisfied with the impact of regulation in terms of addressing greenwashing concerns, while only 49.2% of EU GPs share this view.

• UK remains optimistic – The survey results unveil a relatively widespread sense of optimism among the UK’s GPs and LPs regarding the anticipated impacts of the Green Taxonomy and SDR, with 59.1% of LPs and 58.0% of GPs surveyed believing these will have a positive impact.

• Expectation mismatch (UK Regulation) – Analysis indicates that the upcoming regulatory shifts expected in the UK are set to catalyse a shift in investor reporting expectations with 63.0% LPs expecting to become more demanding in terms of the ESG reporting. However, only 53.0% of GPs are expecting these regulations to bolster LPs’ reporting requirements.

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