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Alternatives managers continue to show improvements in ESG integration

The eighth edition of LGT Capital Partners’ annual ESG Report assesses an expanded universe of 328 managers globally (compared to 304 managers in 2019), grading them on how successfully they have integrated environmental, social and governance (ESG) considerations into their investment activities. Beyond assessing managers, this year’s study also presented key performance indicators (KPIs) on companies in the firm’s co-investment and private debt portfolios.

ESG is high on the agenda of alternative asset managers

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ESG integration: encouraging long-term development

Please learn more about the key findings from our 2020 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.

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

"Continued progress of ESG integration"

“The continued progress of ESG integration by alternatives managers is encouraging to see, and reflects the importance that underlying investors are placing on these issues. The topic of ESG is likely to become even more critical as we come out of the coronavirus pandemic, with the crisis already causing a lot of reflection as to how a wide range of social and environmental issues can be improved. Investors will become even more outcome-oriented as a result, using tools such as the SDGs to ensure their sustainable investment activities have even more impact in a post COVID-19 world.”