ESG divide between US and rest of world laid bare

An annual survey by Aberdeen Standard Investments of its private equity managers reports a backslide in US firms’ ratings.

Only 3 percent of North American managers achieved strong or “green” overall ESG implementation ratings in Aberdeen Standard Investments’ 2020 private equity managers’ survey. This compares with 59 percent of European managers.

Like other fund investors, ASI conducts annual research among its general partners, and allocates them a ranking – or in this case a red, amber or green rating – relative to the peer group on ESG integration and approach.

In the previous year, 9 percent of US firms had achieved “green” status. The year-on-year decrease was probably caused by the firm introducing an additional set of questions into the survey, which likely depressed ratings, the firm noted in the report.

The $251.7 billion AUM firm also found 88 percent of European managers, 25 percent of Asian managers and 3 percent of North American managers were PRI, UN Global Compact or TCFD members.

Manuela Fumarola, ASI’s private equity ESG manager, told New Private Markets that the US-Europe divide is in part down to the fact that Europe has been faster to implement regulation around sustainable investing: “These regulations will be matched globally, eventually. It’s just Europe that’s come first to the party.”

ASI also found 58 percent of European managers, 8 percent of Asian managers and 6 percent of North American managers had clear climate risk assessment processes.