ESG – Is Fatigue Setting In?
ESG (Environmental, Social, and Governance) continues to dominate discussions in private markets. Yet, beneath the surface, both GPs and LPs are grappling with the challenges of keeping pace with evolving standards, reporting demands, and expectations.
ESG is here to stay, but there is fatigue among both GPs and LPs
Yet another conference and yet another panel on ESG. Is it possible to have a conference today and not have a panel on ESG?
I did notice that the attendance seems to be going down, at least relatively speaking. And it seems more and more attended by the ‘practitioners’ of ESG ensuring that everyone is in pre-agreed agreement.
ESG – everyone has another question!
Many LPs, especially the Nordic ones, are becoming more demanding around (ESG standards, creating opportunities for GPs who can authentically align with these values.
LPs are setting up specialized “buckets” for targeted investments, like climate initiatives, opening doors for those GPs prepared to meet niche needs. However, the need for global reach to secure these potential new LPs poses logistical and strategic challenges, especially for smaller teams without established international networks. That brings us back to the advantages of scale.
Broad recognition of the importance and value creation potential of ESG
But, while most are reluctant to say so out loud (there is a not insignificant risk of getting stoned), ESG fatigue is also starting to set in. The rules and reporting guidelines (think SFDR) are not always clear, the goal posts keep moving, each LP has their own set of questions and reporting requirements.
The cost of this is now getting very tangible for both LPs and GPs but is seemingly not really considered or discussed. Though likely controversial his is an important discussion to have and I will dive into it in a future post.
The discussion around ESG is far from over. As LPs push for higher standards, GPs need to weigh the costs and benefits carefully. This evolving landscape offers opportunities—but only for those ready to adapt.
Stay Illiquid
Kasper Wichmann, CEO Balentic
More Insights
Insights
Sign up to keep up to date with the latest news and updates.
© 2024 Balentic ApS. CVR: 44034255. All rights reserved.
Privacy Policy | Terms of Service
The Balentic website and Orca are, and are expected to continue to be, under development. Consequently, some of the features described in this Overview and/or on the website may not yet be available or may work differently. Some features may furthermore not be available to all users.