Intertrust has published the results of a study which suggests 88% of private equity (PE) investors plan to step up their efforts to manage and measure 'Environmental, Social, and Governance (ESG)' performance in their portfolio companies over the next two years.
In the study, general partners (GPs) highlighted the three biggest obstacles to implementing ESG programmes at a portfolio company level as quantifying and monitoring their impact; cost and resource constraints; and managing multiple sources of ESG data.
They predict that it will take over five years before they can produce standardised ESG data across their portfolio companies.
According to Intertrust, this will put the onus on tech-enabled service providers to deliver flexible solutions that can provide independent ESG assessments and benchmarks as well as offer GPs flexibility in adhering to different standards that are constantly changing.
While the majority (54%) of respondents believe they will ultimately benefit from a greater focus on ESG over the coming two years, a sizeable minority (32%) are pessimistic about what they will receive in return. Moreover, only 27% believe that the coronavirus will lead to a greater focus on ESG investing as the role of business in society comes under increasing scrutiny.
Alex Di Santo, Head of Private Equity at Intertrust in Jersey, commented:
“While some private equity managers have bolstered their ESG teams and ESG reporting frameworks; others are facing cost, resourcing and data challenges meaning they’re looking for support outside their business – our expert teams can help solve some of these challenges.”
Research was carried out in April 2020. A total of 143 responses were gathered via an online survey of private equity fund managers across Europe, North America and Asia.
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