NiroImpact: The Growing Demand for ESG Investment in Private Equity: A Quick Guide

The Growing Demand for ESG in Private Equity: The Numbers Speak for Themselves

There's no denying that environmental, social, and governance (ESG) issues are becoming increasingly important to investors. And in the private equity world, limited partners (LPs) are driving this trend, demanding that private equity firms prioritize ESG in their investment strategies. In this post, we'll take a closer look at the statistics behind the growing demand for ESG in private equity, and why it's a trend that private equity firms can't ignore.

90% of LPs Consider ESG in Investment Decisions

According to a survey by Preqin, a leading provider of private market data, 90% of LPs now consider ESG when making investment decisions, up from 85% in 2019. This is a clear indication that ESG is no longer just a nice-to-have, but a must-have for many LPs.

ESG Investment Outperforms Conventional Investments

The Cambridge Institute for Sustainability Leadership found that ESG investment outperforms conventional investments over the long-term. This is another important factor contributing to the growing demand for ESG investment in private equity.

Improved Financial Performance, Lower Risk, and Higher Returns

There are numerous benefits to prioritizing ESG in private equity investments. For LPs, ESG investment offers the opportunity to align their values with their investments and make a positive impact on the world. In addition, ESG investment has been shown to lead to better financial performance, lower risk, and higher returns.

For private equity firms, prioritizing ESG can lead to better decision making, improved reputation and brand image, and increased competitiveness in the market.

Conclusion

The growing demand for ESG in private equity is clear from the numbers, and private equity firms that ignore this trend do so at their own peril. With 90% of LPs considering ESG in investment decisions and ESG investment outperforming conventional investments, it's time for private equity firms to take ESG seriously and start prioritizing it in their investment strategies.

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