Most European LPs plan to ask GPs to use Science-Based Targets, Coller finds

Four charts show LPs’ ESG priorities and portfolio exclusions, from an LP survey by Coller Capital.

Sixty-five percent of European LPs are likely to ask their GPs to use Science-Based Targets to measure their environmental impact within “the next few years”, according to an LP survey by private equity firm Coller Capital. Forty-five percent of LPs based in Asia-Pacific and 23 percent of North American LPs are likely to do so, Coller’s Global Private Equity Barometer shows.

The Science-Based Targets initiative is an organisation that approves companies’ decarbonisation pathways and validates net-zero targets in line with the 2015 Paris Agreement. SBTi released specific guidance for private equity last year, which includes setting decarbonisation targets for private equity firms’ control investments. Seven firms so far have received SBTi approval for their firms’ and portfolios’ decarbonisation targets.

ESG-based exclusions

Sixty-four percent of European LPs have increased their ESG-based exclusions in the past five years, Coller’s survey found.

Environmental exclusions such as thermal coal and non-sustainable deforestation are much more common among European than North American investors.

Environmental concerns

Climate change is an important environmental concern for nearly all investors. However, biodiversity – another high-profile environmental issue that has given rise to a number of dedicated funds – falls behind water and air quality in investors’ environmental priorities.