Asian LPs believe GPs underplay climate change risk - survey

While a higher proportion of Asia-based investors expressed this concern than in North America and Europe, they trail their international peers in terms of internal consensus. Only 41% of LPs in the region believe they have a broad agreement on climate change policy, compared to 52% in North America and 77% in Europe. In all three geographies, internal consensus on environment, social and governance (ESG) is stronger.

At the same time, a higher percentage of LPs in Asia Pacific are already carbon neutral – 9%, compared to 5% in North America and 3% in Europe – a majority do not expect to meet this target in the foreseeable future. Only European LPs appear tied to a specific target, with more than half saying they expected to be carbon neutral by 2030. Only 16% of respondents in North America and 23% in Asia thought they could achieve this goal.

The survey – which covered 107 investors in private equity funds – also found that just over half of Asia-based LPs are unhappy with the allocation of LP advisory committee (LPAC) seats. In contrast, 58% of North American LPs and 72% of European LPs believe these seats are allocated appropriately. Two thirds of all respondents said that LPACs do not represent all LPs equally, but 75% believe LPACs generally do a good job.

A clear majority of institutional investors believe they would benefit from more direct interaction with other LPs. More than two-thirds of Asia Pacific respondents said they have too few opportunities to engage with peers from outside their region, a sentiment shared by North American investors. By contrast, most European LPs feel they do not spend enough time with LPs from organizations similar to their own and from organizations with exposure to the same funds they are invested in.

Nearly half of respondents foresee increasing political risks in emerging markets, with Russia and Greater China the main concerns. About half believe that geopolitical tensions will have a material impact on investment strategies and allocations to private equity funds over the next five years.

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• Topics
• LPs
• GPs
• Coller Capital