Six months in seven papers: Key research of H1 2023

Compiling some of the key research from H1 2023 reveals a market increasingly conscious of the importance of sustainability, but still working out what to do about it.

A look back at this year’s most insightful research on sustainable private markets reveals an industry increasingly willing to engage in the space, but still working out how to do so. Here are seven studies that sum up H1 2023:

Impact goes mainstream

The majority of investors (74 percent) are now incorporating sustainable or impact investing measures at a high level, according to a survey by Cambridge Associates. Some investors are applying measures broadly across their portfolio, while others have carved out a specific allocation.

CA asked 144 of its clients questions about their priorities from a sustainability and impact perspective. Unsurprisingly, climate change was the dominant sector for investment; 77 of respondents were deploying capital in the resource efficiency and climate change space.

Returns focused

While a growing number of investors are turning towards impact, they are not willing to compromise on financial returns when they do. Seventy-four percent of 308 investors surveyed by the Global Impact Investing Network said they expect risk-adjusted market rate returns on their impact investments.

GIIN is releasing a series of papers on a wide variety of issues relating to impact investing. Three have been published so far: one covering the demographics of the impact investing universe; a second covering allocations, asset classes and performance; and a third on impact management and measurement.

Exit performance

Fortunately, a separate report found that most portfolio companies and assets in private markets impact funds meet (23 percent) or exceed (42 percent) their financial performance targets at exit.

Impact Capital Managers, a network of GPs in impact investing, studied 224 exits over the past 10 years in conjunction with law firm Morrison Foerster. The report provides useful data on the profile of buyers, and the differences between asset classes.

Financial incentives

Thirty-one percent of investors align impact achievement with staff performance management and/or incentives, according to a survey by impact verification business BlueMark. The company pulled together data on 84 investors it had recently verified to build a picture of current impact management practices.

For most managers, their position on impact-related financial incentives is still a work in progress. Impact-linked carry is emerging as a concept and a growing number of stakeholders are beginning to view it as best practice. Nevertheless, there are still questions to answer; how targets are set, and what happens to any “unearned” carry, is an ongoing discussion point.


As impact investing has scaled up and attracted more interest, concerns over the legitimacy of claims being made has only grown. In Rede Partners Private Markets & Sustainability Report, greenwashing was cited by 60 percent of respondents as a threat, more so than failure to achieve impact goals (38 percent) and financial underperformance (37 percent).

The advisory firm surveyed over 160 institutional LPs to understand investors’ perspective on the sustainability space. Twenty-one percent of investors intend to increase the sustainability/impact allocations this year, per the report.

Asset class differences

Private credit funds – as well as growth equity and venture vehicles – are “lagging behind private equity investors on several major ESG fronts,” according to a report by ESG advisory firm Malk Partners. Sixty-four percent of credit funds incorporate ESG into their investment progress, compared to 100 percent of private equity investors.

That private credit has not embraced ESG as much as other asset classes will not come as a surprise. There are reasons for optimism; initiatives such as the ESG Integrated Disclosure Project, which brings together lenders to improve transparency and accountability, are a step in the right direction, but there is still a way to go.

Data on data

A report from French management consultancy Opimas highlights something that has become clear in recent years: there is huge opportunity for those providing ESG data products to private markets investors.

Private markets spending on ESG data products is growing at a compound rate of 45 percent per year, according to the report. Annual Sales of private markets ESG data services are expected to reach $120 million by 2025. Spending in 2022 was $45 million.