PRI data shows progress on RI in private equity

The report found that GP signatories are increasing internal efforts to train investment staff on ESG. Over 60% that reported in both 2015 and 2018 now have responsible investment strategies implemented in the development or training plans for investment analysts, an increase of 25% from 2015, and over a third are linking responsible investment objectives to the KPIs of their investment staff.

Improvements on ESG resourcing have also been made, with the number of GP signatories employing responsible investment staff rising from 89 in 2015 to 134 in 2018.

The data is based on 486 signatory responses to the PRI Reporting Framework.

Other highlights from the snapshot report:

• 703 signatories out of a total of 1449 respondents to the 2018 PRI Reporting Framework hold private equity assets. Private equity managers represent the largest group (by number) of single asset class managers to the PRI.
• 89% of GP respondents referred to RI in their latest Private Placement Memorandum and 69% made formal commitment to RI in their latest fund terms (either LPA or side letter) which shows that ESG has marketing value but is also becoming a formal component of fund governance.
• 89% of LP signatories that reported on their private equity assets say that they are using some form of RI due diligence questionnaire or request for proposal as part of the fund selection process

When reviewing ESG objectives during the lifetime of the fund, 74% of LPs are monitoring for ESG incidents and 73% are monitoring compliance with ESG-related investment restrictions. 54% are monitoring the effect of ESG strategy on investment decisions and performance in the underlying portfolio.

“It’s encouraging to see so much progress on ESG being made over the last three years,” said Natasha Buckley, senior manager, private equity at the PRI. “Clearly, LPs and GPs are formalizing their commitments to responsible investment which should result in more systematic and meaningful practices for factoring material ESG risks and opportunities into investment decisions.”

The snapshot report allows the reader to filter the data according to investment strategy and region, and to access the full list of public respondents to the private equity modules in the 2019 Reporting Framework. Read the report and a summary of findings.

Notes to editors:

Reporting is a mandatory annual requirement for PRI signatories; they are required to report on assets that represent >10% of their total AUM.

PRI signatories report US$1.05 trillion invested directly in private equity assets, accounting for approximately one third of global private equity assets. PRI signatories report US$1.1 trillion invested indirectly via private equity funds.