PGGM is committed to investing responsibly.
PE industry is gradually producing better ESG data
2020 has been a challenging year for the world. While the pandemic has caused significant human suffering, there have been positive developments for the environment and increased awareness around issues of equality. During the past year, PGGM’s Private Equity team has encouraged its private equity managers (“GPs”) to take steps in how they measure and report on their carbon footprint and diversity, equity, and inclusion (“DEI”) initiatives.
In 2020, we created a new process to gather greenhouse gas emissions data and DEI KPIs from each of our GPs on an annual basis. These include specifically scope 1 emissions for portfolio companies and gender diversity data at the GP and portfolio companies (both for the C-suite and boards).
27% of companies in the portfolio were able to report on carbon emissions while all GP’s and 77% of portfolio companies were able to produce data on gender diversity. We will drive towards full reporting over the next few years. In addition, we extended our assessment of GPs’ approach to ESG to specifically address their approach to climate change and DEI.
Increasing the quality of GP reporting on ESG has been a focus area for us over the past years. Specifically, we have been focusing on encouraging our GPs to report on company-level KPIs since 2019. We are pleased to see that GPs reporting in this way has increased in our portfolio from 14% in 2018 to 24% in 2019 to 40% in 2020.
Furthermore, we believe our recent push towards collecting standardized emissions and diversity data dovetails nicely with this initiative. As ESG awareness becomes increasingly widespread in the market, we expect more and more GPs to provide this information in detailed annual ESG reports.
2020 was the second year that we invested in Sustainable Development Investments from the private equity impact sleeve. We expanded the number of SDGs we are targeting from 5 to 7 in line with PFZW to also include SDG 11, sustainable cities and communities, and SDG 13, climate action. We invested €142 million from this sleeve in 2020 through three fund commitments and one co-investment follow-on. We will further develop how we report on the impact of our portfolio in the next year.
With the publication of PGGM’s Private Equity Annual Responsible Investment Report 2020, we continue to further improve transparency and reporting regarding our ESG initiatives in line with what we ask from our GPs. We invite you to take a look at the report.
Reporting on ESG in Private Equity enriches the engagement with external managers and leads to improvement, writes Christine Winslow.
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