Post pandemic, it’s likely that the reality we are experiencing today – shut shops, government restrictions and compulsory mask wearing – will return to near ‘normal’. But the boom in environmental, social and governance (ESG) compliant investing, brought on by increased public consciousness and investor preference for a longer-term, more sustainable investment strategy, is unlikely to be a temporary trend. In fact, borrowing the much-used Covid-19 phrase, for private markets it will almost certainly become part of the ‘new normal.’
In private equity, transparency has become the watchword: everyone wants more granular data, more often. And while the debate was once centred (and largely still is) around valuations, a shift occurred in 2020 and the demand for sustainability metrics rapidly increased. Driven largely by changes in the regulatory landscape and the ongoing Covid-19 pandemic, investors’ interest in sustainable investments has increased and, subsequently, so has pressure on organisations to provide more transparency around ESG reporting.
Key to this is having a standardised industry framework for ESG measurement and reporting, but – as yet – there is no global regulatory body monitoring ESG, nor a single established framework to follow. However, given the ongoing and significant regulatory developments around ESG frameworks that are taking place across multiple regions, this looks set to change.
In my latest article published by Private Equity News, I discuss the current ESG standardisation hurdle in more detail and examine the key ESG-focused developments underway in Europe, Asia, the US and globally as we move towards ESG monitoring and reporting becoming the status quo.