Greater transparency offered for ESG alternative funds

ESG esg disclosure alternative assets private markets

15 April 2024
| By Jasmine Siljic |
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Preqin, an alternative assets data provider, has brought a range of new ESG fund performance benchmarks to the market to provide greater transparency in the private asset space.

The ESG benchmarks seek to create higher standards around performance analysis by examining ESG funds as well as Sustainable Finance Disclosure Regulation (SFDR), impact and climate funds.

Advisers will be able to benchmark chosen ESG-labelled funds for their clients with other ESG or non-ESG funds and fund managers as part of their sustainability strategy.

According to Preqin, the offering was formed in response to the lack of standardised ESG fund performance data in the alternatives market – which has led to the rise of recent anti-ESG criticism.

“The alternative markets are famously opaque, as private firms do not have the regulatory duty to disclose such details. And yet, in an ever-evolving landscape, investors, fund managers and advisers need to equip themselves with robust tools and reliable data to make informed decisions when it comes to ESG and impact investing,” the firm stated.

The product enables clients to assess more than 200 ESG fund performance benchmarks, covering over 1,000 ESG funds, including SFDR funds.

It covers key private market asset classes, such as private equity, venture capital, real estate, private debt, natural resources and infrastructure. Moreover, the offering uses the following labels: ESG integration, impact, climate, SFDR Article 8, SFDR Article 9, sustainable development goals (SDG) and Shariah compliant.

Jaclyn Bouchard, Preqin EVP and head of ESG solutions and corporate responsibility, said: “We look to empower anyone who invests in, allocates to or advises on ESG in alternatives. Through our benchmark offering, we aim to unleash the power of data to increase transparency around the performance of ESG funds to enable more opportunities for capital to flow to sustainable investments.”

According to Fabien Chen, Preqin SVP and head of benchmarks, the insights firm is aiming to bring further transparency and objectivity in private markets through the new offering.

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