Deep Dive: Private markets take steps towards the 'mainstreaming' of ESG

Issues around data and transparency

As appetite for private markets grows, so does the demand for ESG solutions in the space. However, the lack of standardised data, transparency and regulatory frameworks relative to its public markets peers has made it difficult for responsible investors to discern genuine ESG integration.

A growing number of private capital funds are taking ESG into account, as evidenced by the rising number of PRI signatories in the sector. Around 42% of global private assets, or $4.7trn, is now managed in funds that claim to follow sustainable investment principles, according to a survey by Preqin. Despite the rising growth of ESG adoption, the crackdown against greenwashing by US and European regulators in the past year has mostly focused on public investments. However, the EU's SFDR is expected to begin to filter through to the sector. Due to their propensity to be smaller or midsi...