Net zero increasingly a priority for alternative investment managers

The proportion of private equity managers assessing and measuring climate-related risks has risen sharply over the last twelve months, supported primarily by a significant increase among Asian managers. 

According to new research shared with Net Zero Investor, the proportion of managers addressing climate-related risks rose 12 percentage points to 55%. 

LGT Capital Partners analysed the activities of 381 managers globally, including 309 private equity managers, to assess the improvements being made in ESG practices. 

The research showed that Europe continues leading the way in ESG integration, but Asia is catching up quickly. 

This year, 82% of European private equity managers assessed were ranked ‘excellent’ or ‘good’ for their ESG approaches, compared with 79% for Asian managers. 

In the US, progress has also remained broadly stable, with 49% of managers earning high marks for ESG integration.

Private debt managers have made significant progress on climate change: 81% of the portfolio companies analysed are now assessing their own carbon emissions, up 24 percentage points from last year.

Hedge fund managers are also moving forward in ESG integration, with the proportion of firms now rated ‘excellent’ or ‘good’ on ESG having risen to 69%, versus 64% last year. 

This is most likely driven by increasing regulatory requirements and investor demand, although all managers demonstrated some commitment to ESG and recognized sustainability-related risks.