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ESG integration continues to improve among alternatives managers

European alternatives managers continue to lead the way in ESG according to our ESG Report 2018. This sixth annual ESG report assesses some 294 managers globally, grading them on how successfully they have integrated environmental, social and governance (ESG) considerations into their investment activities.

ESG is high on the agenda of alternative asset managers

Please learn more about the key findings from our 2018 report in the video.

ESG Report – scope and methodology

LGT Capital Partners has been publishing its ESG Report annually since 2013. The ESG Report forms part of the firm’s larger ESG due diligence, monitoring and manager engagement process. The assessment serves a two-fold purpose. First, it shows our investors the extent to which managers are considering ESG factors in their investment, ownership and reporting practices. Second, it facilitates our engagement with managers on ESG, highlighting excellence in implementation and flagging areas for improvement. LGT Capital Partners’ analysis is based on assessment of managers across four key criteria: commitment to ESG through the development of specific policies or adherence to broader industry standards (such as UN PRI); the extent to which ESG is formally integrated into investment processes; ownership philosophy and the extent to which managers are active in defining the ESG practices of investee companies; and their reporting on ESG (at both portfolio company and aggregate fund levels). Managers are then assigned an overall rating on a scale of one to four, where one indicates ESG excellence and four indicates little or no institutionalized commitments to ESG practices.

"Further work is needed"

“ESG has become an highly important issue for investors in recent years, with many institutional asset owners placing it at the heart of their investment activities, forcing their managers to do likewise. Our findings show that alternatives managers are responding to these requirements, particularly in private equity where the majority of providers now rank highly for their approach to ESG. This is not the end of the story however; further work is needed. Managers will have to continue to develop and enhance their approaches to ESG in order to meet the needs of investors.”