73% of Private Equity Managers Now Boast Robust ESG Processes, LGT Capital Partners’ ESG Report

LGT Capital Partners’ 2024 ESG Report highlights the growing dedication among alternative investment managers to Environmental, Social, and Governance (ESG) standards. Over the past decade, the percentage of private equity managers with robust ESG processes has jumped from 27% to 73%, signaling a significant shift towards sustainability.

Tycho Sneyers, Managing Partner at LGT Capital Partners and Member of the Board of the Principles for Responsible Investment (PRI), emphasized the impact of ESG practices: “ESG practices significantly enhance commercial value by aligning portfolio companies with industry transitions toward net-zero, securing advantages through proactive regulatory compliance, and improving operational efficiency, talent acquisition, and customer engagement, thereby increasing market share and competitive positioning.”

Global Trends in ESG Practices

Europe continues to lead in ESG excellence, with 51% of private equity managers rated “excellent,” an increase from 42% in 2023. Meanwhile, Asia and the US show modest progress, with 34% of Asian managers and 16% of US managers achieving “excellent” ratings.

DEI awareness is also on the rise. In 2024, 74% of private equity managers have formalized DEI policies, a substantial increase from 60% in 2022. This trend reflects a growing recognition of the importance of diversity, equity, and inclusion across asset classes.

Climate action remains a top priority for LGT Capital Partners. The firm has expanded its climate-action framework to include forward-looking information, categorizing companies based on their decarbonization efforts. Globally, 42% of companies are taking steps to decarbonize, while 35% are aligning with net-zero goals.

Sneyers concluded, “At LGT Capital Partners, we recognize that driving ESG through actions in the real world requires intensive engagement and that creating truly sustainable investment portfolios is a long-term project with no decisive endpoint. We are convinced that incremental improvement, year-on-year, delivers real outcomes over time.”

Despite the challenges, LGT Capital Partners’ report underscores the ongoing commitment of alternative investment managers to ESG, with notable progress and room for further improvement, particularly in emission tracking and climate action.