Integrate ESG into your strategy to empower better decision making and increase stakeholder confidence.
There is growing investor commitment to integrating ESG in private equity. Significantly, 72% of 211 LP respondents to the 2014 Principles for Responsible Investment (PRI) reporting cycle indicated that they are integrating ESG considerations into their processes for selecting, appointing and monitoring fund managers.
LPs and GPs are acting on this commitment and are becoming more systematic in how they identify, manage and communicate ESG risks and opportunities.
What does it mean for GPs and LPs?
LPs want a better understanding of the ESG risks and opportunities in their portfolio and want to have trust that their GPs are managing these issues effectively. To achieve these objectives, LPs are increasingly requesting their GPs to incorporate ESG criteria in their fund selection process, to manage relevant ESG issues, and to report on ESG performance.
GPs need to demonstrate to their stakeholders that they are effectively incorporating ESG issues in their investment decision making. To achieve this, GPs need to monitor ESG performance of portfolio assets, manage ESG issues and communicate key developments and performance to their stakeholders.
Managing and analyzing ESG information is a challenge
Collecting and managing ESG information can be a time-intensive, exacerbated by the lack of a consistent approach. LPs’ have differing investment beliefs and policies; industry frameworks and public expectations are evolving.
In keeping with eFront’s ongoing objective to optimize information management, increase transparency for the alternative investment community and help investors make informed decisions, we have developed a solution fully dedicated to the management and analysis of ESG information: FrontESG.