Anne Matusewicz and Jérémy Rasori of Reporting 21 (now part of Cority), recently sat down with Private Equity International to discuss changes to the ESG landscape for private markets investors in recent years, particularly when compared to the public markets.
Interview Summary
There has been a significant increase in attention given to ESG in the last five years, with more dedicated hires at senior levels, as well as through investment and the attention paid to ESG data and value creation strategies. The attention increase is due in part to the Sustainable Finance Disclosure Regulation (SFDR), which has changed the course of ESG in Europe and forced a lot of players to start formalizing policies and collecting extra-financial data.
In the US, the lack of regulatory requirements means that it is not necessarily mandatory for private markets investors to disclose ESG information. However, many GPs do business in Europe, have European assets in their portfolios, or employ European companies as part of their supply chain.
Further, LPs are asking more questions about ESG strategy, what teams look like and how governance structures work, and they are demanding more data. Even smaller firms are starting to bake ESG into their mission.
Read the full interview to understand:
- How has ESG evolved for private markets investors in recent years, particularly when compared to the public markets?
- How have the attitudes of large private markets investors towards ESG changed compared to five years ago, and how do approaches vary between the US and Europe?
- Are portfolio companies open to responding to ESG surveys? What is the feedback from them on the issues that arise?
- Is there a difference in the level of engagement between GPs and LPs?
- Where are LPs still looking for guidance when it comes to tracking ESG across their private markets portfolios?
- Where do you expect to see PE firms focusing their ESG efforts in 2023 and beyond?