united kingdomen
Robeco Private Equity publishes 2018 ESG Engagement Report

Robeco Private Equity publishes 2018 ESG Engagement Report

28-08-2018 | Insight

ESG integration is gaining more traction in private equity. Robeco’s latest Private Equity Engagement Report concludes that fund managers in the company’s private equity ESG Program have taken further steps to embrace ESG factors and integrate them into their investment processes.

  • Silva Dezelan PhD,
    Dezelan PhD,
    Director Sustainability, Private Equity

Speed read

  • Annual survey shows further integration of ESG factors in private equity
  • Positive trend will persist supported by advancement of significant ESG initiatives
  • Results are encouraging while potential for further progress remains
Stay informed on our latest insights with monthly mail updates
Stay informed on our latest insights with monthly mail updates

“If we look at the activities of PE fund managers in the last year, we can conclude that ESG factors have become further integrated into their investment process.”, states the report in its introduction. Recommendations by the Financial Stability Board’s Task Force on Climate Related Financial Disclosures, the adoption of the European Commission’s Action Plan on Financing Sustainable Growth and the publication of a guidance document on ESG Monitoring, Reporting and Dialogue in Private Equity by PRI suggest that this positive trend will continue.

In the twelfth edition of the ESG Engagement Report1 Robeco Private Equity documents the activities of PE managers that are part of its ESG Engagement Program.

Stable overall ESG scores

2017 was a year in which General partners (GPs) continued to strengthen their ESG integration in investment, monitoring and reporting practices which has translated into stable overall ESG scores.

The average ESG score for the 63 fund managers that participated in last year’s survey was 69%, compared to 66% in 2016 and 59% in 2015. Meanwhile, the median ESG score stands at 69%, versus 69% in 2016 and 64% in 2015. These figures indicate that most fund managers now have functioning ESG frameworks in place.

ESG integration in private equity is becoming more mainstream

The results are based on an annual assessment by Robeco Private Equity that uses a reporting and assessment tool developed by the UN Principles for Responsible Investment (PRI). A growing number of investors in the private equity world are now signing up to the PRI and its goals.

Low reputational risk

The reputational risk of private equity portfolio companies monitored by Robeco Private Equity remains relatively low. The analysis of ESG-related news stories and alerts by RepRisk2 shows that the majority were not involved in any ESG-related incidents. Those that received negative media attention experienced relatively low impact and coverage. To increase awareness of ESG issues and encourage better communication, Robeco Private Equity continuously engages with fund managers whose portfolio companies have had to deal with incidents.

Increased commitment to UN SDGs

In their role of active owner of portfolio companies and the extended control this entails (compared to public companies), the PE managers are in a good position to promote the UN Sustainable Development Goals (SDGs3).

In 2017 the number of PE fund managers that committed to contributing to these SDGs increased further. In terms of the contribution to specific goals, most portfolio companies contributed to SDG 7 and SDG 12, which relate to sustainable energy and sustainable consumption and production.

Despite the increasing focus on SDGs, the report also recognizes that SDG-related and impact reporting is still in its infancy and most of the managers first need to develop consistent ESG reporting frameworks.

Monitoring climate-related risks

An analysis of how PE managers currently manage climate-related risks and opportunities also indicated that half of the respondents have already incorporated climate-related risks and opportunities into their investment strategy and process in some way. In addition, 38% of the fund managers have integrated their process for climate-related risks into their overall risk management.

However, only 24% of managers currently engage with their portfolio companies to encourage better disclosure and practices relating to climate-related risks. The survey results also showed that only about one-fifth of managers currently use emission data or analysis in investment decision-making. These percentages show clear potential for improvement.

About the Robeco Private Equity ESG Engagement Program

Robeco Private Equity’s ESG Engagement program, introduced in 2014, aims to encourage private equity fund managers to implement ESG best practices in their investment process. Through its ESG activities, which have been recognized by the PRI with an A+ rating, Robeco Private Equity aims to draw the attention of PE managers to ESG issues and assist them in their efforts.

As part of the program, private equity fund managers undergo an annual ESG assessment which serves as input for dialogue on potential improvements. Robeco Private Equity’s ESG engagement program strives to contribute to improving the risk-reward characteristics of client portfolios and enhance the added value of private equity fund managers.

1 Please note that we have changed the year referencing in the title of our annual ESG engagement report. The data that fund managers reported to us relate to the end of calendar year 2017, but the report was written and published in 2018. Henceforth the year of publication will therefore be recorded in the title of our annual ESG reports.
2 RepRisk, a leading business intelligence provider specialized in environmental, social and governance risk analytics to monitor the reputational risk of portfolio investments.
3 SDGs represent the global sustainability agenda for 2030 and provide a systematic framework for dealing with the most pressing social and environmental challenges globally.

Subjects related to this article are:


Please read this important information before proceeding further. It contains legal and regulatory notices relevant to the information contained on this website.

The information contained in the Website is NOT FOR RETAIL CLIENTS - The information contained in the Website is solely intended for professional investors, defined as investors which (1) qualify as professional clients within the meaning of the Markets in Financial Instruments Directive (MiFID), (2) have requested to be treated as professional clients within the meaning of the MiFID or (3) are authorized to receive such information under any other applicable laws. The value of the investments may fluctuate. Past performance is no guarantee of future results. Investors may not get back the amount originally invested. Neither Robeco Institutional Asset Management B.V. nor any of its affiliates guarantees the performance or the future returns of any investments. If the currency in which the past performance is displayed differs from the currency of the country in which you reside, then you should be aware that due to exchange rate fluctuations the performance shown may increase or decrease if converted into your local currency.

In the UK, Robeco Institutional Asset Management B.V. (“ROBECO”) only markets its funds to institutional clients and professional investors. Private investors seeking information about ROBECO should visit our corporate website www.robeco.com or contact their financial adviser. ROBECO will not be liable for any damages or losses suffered by private investors accessing these areas.

In the UK, ROBECO Funds has marketing approval for the funds listed on this website, all of which are UCITS funds. ROBECO is authorized by the AFM and subject to limited regulation by the Financial Conduct Authority. Details about the extent of our regulation by the Financial Conduct Authority are available from us on request.

Many of the protections provided by the United Kingdom regulatory framework may not apply to investments in ROBECO Funds, including access to the Financial Services Compensation Scheme and the Financial Ombudsman Service. No representation, warranty or undertaking is given as to the accuracy or completeness of the information on this website.

If you are not an institutional client or professional investor you should therefore not proceed. By proceeding please note that we will be treating you as a professional client for regulatory purposes and you agree to be bound by our terms and conditions.

If you do not accept these terms and conditions, as well as the terms of use of the website, please do not continue to use or access any pages on this website.

I Disagree