A survey by Aberdeen Standard Investments (ASI) has found that ESG engagement in private equity firms is increasing.
Results showed continued strong ESG engagement across Europe and an improvement in quality from Asia Pacific (APAC). Private Equity firms are clearly increasingly aware of issues such as climate change and are responding with action such as carbon offsetting and reducing their reliance on single-use plastics. Only 38% of firms surveyed however, are signatories of UNPRI, UN Compact or similar. Results also show that Firms based in North America appear to be lagging behind their European and APAC counterparts.
The survey, now in its fifth year, aims to monitor the current level of engagement at both the General Partner1 (GP) and underlying portfolio company level. The survey was sent to 176 GPs across Europe (60), North America (82) and APAC (34) with an overall response rate of 52%. Respondents of the survey were given an overall ESG rating2 according to their responses.
- ESG remains an important consideration for GPs in Europe, with a consistent number of respondents achieving a Green rating in 2019. Indeed, no respondents from Europe were assigned a Red rating
- More than half of the respondents implemented at least one positive ESG change in the year, with many introducing several initiatives
- Results show that North America continues to lag behind Europe and APAC
- Less than one third of GPs surveyed are a formal signatory of the UNPRI, UN Global Compact or similar, or are considering becoming a signatory. Indeed, 39% have no current plans to do so.
- There’s an increased focus on the UNSDGs3, though many GPs are looking for industry guidance on how to apply them
The following relates only to Private Equity firms based in Europe4
- More than half of respondents reported having taken meaningful action in relation to ESG, including carbon offsetting, reduced air travel and reducing reliance on single use plastics
- Over 80% indicated that they promote diversity initiatives and encourage diversity at a portfolio company level, though many are yet to establish monitoring procedures.
Merrick McKay, Head of European Private Equity, Aberdeen Standard Investments, commented: “The general trend suggests that Private Equity firms are regarding ESG as increasingly important, with firms based in Europe leading the way. There’s still scope for improvement in terms of their ability to measure and monitor against key ESG-related metrics and this is something that we will be encouraging during our discussions with GPs. We are optimistic looking at results from firms based in Asia Pacific, with a number of respondents having implemented initiatives in the last year to improve ESG performance. ESG engagement in North America is lagging behind Europe and Asia Pacific and we will follow up with those GPs who either didn’t respond or who scored poorly relative to their peers. ESG remains a core component of our investment philosophy and is incorporated into our diligence and monitoring processes.”
1 The term General Partner refers to a Private Equity firm
2 Ratings were assigned by ASI based on GP’s responses according to the following definitions:
3 United Nations Sustainable Development Goals
4 GPs were asked ten questions. The survey included responses from European, North American and Asia Pacific Private Equity companies. Given the relative nascence of ESG in North America and APAC, GPs in those regions were asked only the first five questions.
0131 372 1821
Notes to editors
About Aberdeen Standard Investments
- Aberdeen Standard Investments is a global asset manager dedicated to creating long-term value for our clients, and is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments. With over 1,000 investment professionals, we manage £486.5 billion* of assets worldwide. We have clients in c.80 countries supported by over 40 offices globally. This ensures we are close to our clients and the markets in which we invest. (*as of 31 December 2019)
- We are high-conviction, long-term investors who believe teamwork and collaboration are the key to delivering repeatable, superior investment performance.
- Standard Life Aberdeen plc is headquartered in Scotland. It has around 1.2 million shareholders and is listed on the London Stock Exchange.
- You can access the Aberdeen Standard Investments media centre here: https://www.aberdeenstandard.com/news-and-media
- Aberdeen Standard Investments has been a UN PRI signatory for over 100 years, recently being awarded a PRI rating of A+
For Professional Investors onlyThe value of investments, and the income from them, can go down as well as up and you may get back less than the amount invested. Past performance is not a guide to future results. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. We recommend that you seek financial advice prior to making an investment decision. Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments.
The details contained here are for information purposes only and should not be considered as an offer, investment recommendation, or solicitation to deal in any investments or funds and does not constitute investment research, investment recommendation or investment advice in any jurisdiction. Any research or analysis used to derive, or in relation to, the above information has been procured by us for our own use, without taking into account the investment objectives, financial situation or particular needs of any specific investor, and may have been acted on for own purpose. No warranty is given as to the accuracy, adequacy or completeness of the information contained in this communication and no liability for errors or omissions in such information. Readers must make assessments to the relevance, accuracy and adequacies of the information contained in this communication and make independent investigations, as they may consider necessary or appropriate for the purpose of such assessments. Any opinion or estimate contained in this communication, are made on a general basis. No information contained herein constitutes investment, tax, legal or any other advice, or an invitation to apply for securities in any jurisdiction where such an offer or invitation is unlawful, or in which the person making such an offer is not qualified to do so.
United Kingdom issued by Aberdeen Asset Managers Limited. Authorised and regulated by the Financial Conduct Authority in the United Kingdom. Registered Office: 10 Queen’s Terrace, Aberdeen AB10 1XL. Registered in Scotland No. 108419.
Standard Life Investments companies: Standard Life Investments Limited is registered in Scotland (SC123321) at 1 George Street, Edinburgh EH2 2LL. Standard Life Investments Limited is authorised and regulated in the UK by the Financial Conduct Authority.