The industry continues to drive ESG integration toward real outcomes, with climate action as the primary concern

LGT Capital Partners’ tenth annual ESG Report analyzes the activities of 392 managers globally (including 303 private equity managers) and assesses the improvements made in ESG practices. The new report shows that alternative investment managers continued to improve ESG integration and increase their focus on ESG outcomes, whilst regulators are also driving the implementation of sustainable investment regulations. The most pressing issue on investor’s agendas continues to be climate change. In addition to progress being made on climate change, managers have also made strong improvements with respect to diversity and inclusion (“D&I”) – a trend that is becoming increasingly important.

Raising the ESG bar

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Alternative investors increasingly focusing on outcomes as ESG integration deepens

Please learn more about the key findings from our 2022 report in the video.

Private equity managers: Significant regional variation persists...

How private equity managers monitor greenhouse gas emissions

Private equity managers: Proportion of managers that monitor greenhouse gas emissions

Private equity managers: Proportion of managers that address climate change in their ESG policy

Private equity managers: Proportion of managers with a standard framework for assessing climate change risks

Proportion of portfolio companies assessing their carbon emissions

Private equity: Proportion of managers that have a D&I policy in place

Private equity: Proportion of managers that consider D&I in their investment decisions

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 investment 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 the 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.

Tycho Sneyers, a Managing Partner at LGT Capital Partners and board member at the UN PRI

"Trend towards more outcome-oriented approaches gains momentum"

“Over the past twenty years, since we started analyzing ESG activities, we have seen clear and significant progress in how managers approach ESG issues. In particular, this is reflected in areas such as climate change, D&I, and the continued trend towards outcome-oriented approaches, where we see managers integrating ESG aspects into their activities. Looking forward, we strongly believe that ESG integration will continue to help address the long-term challenges people and planet are facing, and support investors to appropriately position their portfolios in the growing spectrum of ESG opportunities and risks.”

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LGT CP ESG Report 2022