ESG in Alternatives

Fig 1: Pace returns to ESG fundraising in 2024

ESG fundraising resurgent after cooler 2023

$282bn of capital was raised by 528 ESG funds over 2021 and 2022, compared with just $226bn by 629 funds over the preceding seven years. While 2021 was a strong year for private capital fundraising generally, the continued surge in ESG fundraising into 2022 made it a phenomenon distinct from the wider market. In light of this rush of capital, and alongside the onset of a tighter monetary environment, ESG fundraising cooled in 2023, but has seen a resurgence so far in 2024.

Performance of ESG funds not significantly different

The mean (average) performance of ESG funds was 13.5%, compared with 15.0% for all private capital funds. This difference is not statistically significant, but ESG impact funds do show significantly lower returns at just 7.4%. Even accounting for asset class, there appears to be no difference in performance between ESG and non-ESG funds. However, ESG funds do show lower variance in returns, potentially because they are better able to manage downside risks.

Growing relevance of renewables deals

The number of renewable energy deals tracked by Preqin from 2014 to April 2024 was 14,995. As many renewable deals are small in size it can be challenging to track deal value, but we track aggregate deal value across this period at $769bn. The growing relevance of renewables is evident in the share of infrastructure deals accounted for by the sector, which reached a record 59% in 2023, compared with 48% in 2014.

Report

ESG in Alternatives 2024

ESG in Alternatives 2024 provides the latest insights on developments in what is becoming a core competency for managers. Using data from Preqin ESG Solutions, and with help from our expert partners, this report provides a broad overview of the ESG market as it stands, with an analysis of the key trends, GP tactics, and investor views. The report explores the link between ESG and fund performance, as well as developments in ESG litigation, strategies outside of impact, and the growing relevance of renewables deals.

Discover our latest report

Find out more about Insights+

Our full suite of ESG Solutions

We aim to make sure every decision taken in alternative markets is a sustainable one. With this in mind, we’ve built ESG Solutions to give you the data and insights you need to integrate ESG into your decision-making.

Building on in-depth ESG KPIs and disclosures for LPs and GPs, we’ve extended our ESG Solutions product with ESG Risk Analytics and Impact Potential. These additions improve your visibility of fund- and asset- level risk with 147,000+ private company Risk Exposure Estimate Scores, and help you uncover opportunities across labeled and unlabeled impact assets with Impact Potential.

Learn more

ESG in Alternatives 2024 Webinar

Private capital markets have undergone notable changes in recent years to incorporate ESG practices. There has been significant growth in climate and impact funds and the further advancement of investment in renewable energy towards achieving global climate goals. These developments are shaping the future of ESG investing, making it an exciting time to be part of this transformation.

Join our panel of experts, including LGIM and Edmond de Rothschild, who will provide insightful commentary on ESG fundraising markets, emerging analysis on ESG fund types and performance, and a deep dive into the importance of renewable energy to achieving environmental outcomes in line with global climate goals 2050.

Register here

Revolutionizing impact & sustainability data in private markets

Impact investing often sparks curiosity and debate in equal measure. Can financial goals align with positive non-financial outcomes? Despite questions, the movement is surging and credible and accurate data is crucial at the investment due diligence stage. With evolving ESG regulations, robust, granular, and auditable data is essential.

Explore more ESG-themed materials

ESG needs dedicated people. Meet some of ours

Preqin is on a mission to pioneer ESG data and research in alternatives, bringing transparency to an opaque market. Our teams are central to the company’s growth plans as the demand for high quality ESG data is top of mind for alternatives professionals.

Discover ESG career insights

Get ESG updates from Preqin

Get the latest ESG news, articles, and Preqin ESG Solutions product updates by signing up below.

How can we help you?

Preqin Pro

Access comprehensive private capital and hedge fund datasets and analytics tools.

Book a demo

Insights

Stay on top of the latest developments in private markets with exclusive industry reports, publications, and statistics.

Create a free account

Let us know how we can help – we’re here to answer any questions you might have.

Get in touch