News & Analysis

ESG disclosure practices in three charts

A growing number of firms are signing up to voluntary ESG frameworks, according to a report from Orbis Advisory.

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The majority of private markets firms are now signed up to the Principles of Responsible Investment, according to Orbis Advisory’s report on ESG disclosures.

The Private Equity ESG Transparency Index assesses firms on the comprehensiveness and quality of their disclosure and reporting, rather than their substantive performance against ESG metrics. It is based on 83 criteria that span responsible investment (incorporation of ESG into investment decisions and active ownership) and ESG considerations within GPs’ internal operations. All of the 141 firms surveyed are members of the British Private Equity and Venture Capital Association.

A number of voluntary reporting frameworks are becoming more popular among firms, says the report. The PRI continues to be the most popular with 61 percent of firms now using it compared to 50 percent in 2021. The UN Sustainability Goals is also growing in popularity with reported use increasing from 17 percent to 29 percent in 2023. Other popular frameworks include Initiative Climat International (24 percent) and the ESG Data Convergence Initiative (15 percent).

When it comes to asset classes, growth private equity managers recorded the lowest average level of ESG disclosure in relation to both responsible investment and portfolio management (24 percent) and in-house initiatives (18 percent). Infrastructure firms had the highest average level of portfolio management disclosure (49 percent). Global buyout firms recorded the greatest average level of disclosure relating to in-house ESG initiatives (48 percent).

Despite biodiversity issues having risen up the ESG agenda, only a small minority (10 percent) of firms are currently disclosing in-house biodiversity initiatives. Twenty-eight percent of PE firms disclosed a general TCFD strategy statement, meaning they were in the process of aligning with and reporting TCFD recommendations. Just 11 percent of PE firms have released a fully aligned TCFD report.

Orbis’s report also included a list of the top performing firms – find it here.