Private equity firms considerably improved their integration of environmental, social and governance practices last year, according to research by LGT Capital Partners.
The Switzerland-based fund of funds manager’s ESG Report 2017 judged 55 percent of global private equity firms in its network to have excellent or good practices for integrating ESG into their investment activities in 2017, up from 50 percent the previous year. LGT evaluates its managers on four ESG themes: commitment, investment process, ownership and reporting.
Asia led the growth, with 57 percent of LGT’s managers now falling within the two highest quartiles, compared with just 45 percent in 2016. Europe also showed strong improvement; 66 percent of managers in LGT’s network were rated as excellent or good, up from 61 percent the previous year.
Growth was more sluggish in the US, with those ranking in the top two quartiles growing to 38 percent from 36 percent in 2016. “We know from our discussions with these [US] managers that there is interest in the topic, but many would like guidance on concrete steps they can take on ESG,” the report said.