December 2, 2022

Why Private Markets Should Prioritize ESG

In private markets, environmental, social, and governance (ESG) considerations have evolved from a nice-to-have exercise to a critical aspect of business evaluation and growth. For example, according to a PwC survey, 65% of private equity firms have developed a responsible investing or ESG policy and the tools to implement it. Similarly, a Bain study found that 70% of limited partners (LPs) say their organization’s investment policies include an ESG approach. 

The urgency around addressing global issues such as climate change is driving stakeholders, from investors to customers, to use ESG factors to evaluate businesses and hold them accountable to stated commitments. Additionally, changing global disclosure requirements, such as the EU’s Sustainable Financial Disclosure Regulation (SFDR), are increasingly seeking transparency and consistency in reporting. 

The rapid evolution of the ESG landscape and pressure from stakeholders are creating a pressing need for private equity firms to collect and report on ESG data. To do this, firms will need to develop a robust and documented strategy for incorporating these considerations into investment decisions. However, building a strategy and charting a path forward takes time—and to be ready to report on ESG metrics in the near future, it is critical to start today. 

Novata’s new eBook, “ESG: Why Private Markets Should Prioritize Now,” provides critical insights to empower general partners (GPS) to take the first steps toward developing a comprehensive ESG strategy. The ebook breaks down the factors driving the demand for ESG in private markets, including disclosure requirements and LP expectations, and why now is the time for firms to get started. It covers:

  • Which disclosure requirements are relevant to private equity firms
  • How LPs & GPs are integrating ESG factors in investment decisions
  • Where sound ESG practices create value for investments
  • How ESG provides a competitive advantage for private equity firms
  • Questions to answer to get started with an ESG strategy

To learn more, download a complimentary copy of the eBook.