Evidence Of ESG Being Demanded

ESG (environmental, social, and governance) has risen to the fore in recent years and regulations are becoming more prescriptive in what is expected of managers in private capital markets, says Preqin. Its annual environmental, social, and governance (ESG) report ‒ ‘ESG in Alternatives 2022: The Transparency Tipping Point’ ‒ shows while many investors and managers are still developing their expertise, they are increasingly demanding evidence on how ESG is being incorporated into strategy formation, deal sourcing, and execution. Investors are a key push factor in ESG uptake in private markets as managers look to deliver against limited partner (LP) preferences for ESG adoption. It found a quarter (25 per cent) of those surveyed reported having turned down an investment opportunity because of ESG standards, with a further two in five (39 per cent) saying they would be prepared to do so.