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July 10, 2023

Private markets turn away from sustainable investment, survey finds

Row of wind turbines
PitchBook’s survey found that 17 per cent of investors in private markets do not plan to incorporate sustainability into their work, compared with 9 per cent in 2021 (Photo: Westend61/Envato)

Almost a fifth of private markets investors and their advisers have no plans to build sustainability into their investment approach, according to a recent study.

A new survey of private markets has revealed a simultaneous increase in the proportion of investors and their counsels adopting sustainability, and a rise in the proportion of those who are turning away from it.

The survey by research company PitchBook was completed fully by 419 respondents and captured an increase in the adoption of sustainability to 37 per cent, up from 30 per cent two years ago. But 17 per cent of investors and advisers in private markets now do not plan to incorporate sustainability into their work, compared with 9 per cent in 2021.

“Fewer people are even considering implementing sustainable investment practices — they have either converted to full integration or have chosen to never do so,” the report said. “Those exploring in 2021 seem to have sorted themselves into either adopters or those who will not be pursuing sustainable investment objectives.”

The report found that 32 per cent of respondents have lifted their focus on sustainable investing, while 56 per cent said their focus remained unchanged. However, 12 per cent indicated that their interest in sustainable investing has fallen — up from 9 per cent in 2022.

PitchBook’s report found that evidence of the polarisation surrounding environmental, social and governance issues was evident when collecting open-ended responses.

Its 2020 survey recorded one “highly negative” response to a question seeking to understand the impact of current geopolitical and economic events on respondents’ sustainable investing. This increased to five responses in 2021.

Yet around 50 respondents to last year’s survey recorded a highly negative answer to this question. “While some of these responses did not offer any substantive critique, with such comments as ‘ESG is a Ponzi scheme’, or ‘ESG is sooooo [sic] 2021’, others were a mix of valid concern and vitriol,” wrote PitchBook analyst Anikka Villegas.

Read the report here.

A service from the Financial Times