In addition to recruiting more ESG-dedicated staff, buyout groups are also drafting plans to increase diversity
Private equity firms are planning a hiring spree to increase the number of dedicated responsible investment professionals they employ, as pressure to address environmental, social and governance issues intensifies.
Two thirds of general partners responding to secondaries specialist Coller Capital’s annual ESG report said they expect to increase their existing in-house ESG resources, while 5% have said they will be appointing their first dedicated person.
Currently, nearly 60% of fund managers employ ESG professionals. Coller’s latest study surveyed 85 GPs, representing 452 private equity funds mainly headquartered in North America and Europe.
In addition to recruiting more ESG-dedicated staff, buyout groups are also drafting plans to increase diversity.
Half of GP management companies and more than one-third of portfolio companies have a formal plan in place to increase diversity over the next three years.
Diversity is an ongoing problem within private equity. Data from Preqin, published at the start of the year, showed that women make up just 17.9% of private equity employees worldwide, unchanged from 2017. Only 5.2% of board seats at private equity firms are held by women, and they occupy fewer than one in 10 senior roles in the industry.
Coller’s survey found that female partners continue to be a minority at GPs, with 82% of respondents saying they represent fewer than 20% of their partnerships.
The proportion of GPs with women on their investment committees has stagnated in recent years, with only 37% of those surveyed saying they have female representation in this part of the business. No respondents reported a partnership which was predominantly female.
However, increasing diversity is a focus of 71% of respondents, coming in just after ESG training and coaching.
Revealing its own gender split, Coller noted: “Like most firms in our asset class, we are not yet where we want to be with regard to diversity and inclusion, and this remains a work in progress.”
Source: Financial News