Majority of GPs believe Gen Z creates new level of ESG investors

Vistra’s second global research study has found 82% of GPs believe a rise in millennials and generation Z will provide new levels of socially engaged investors.

The Private Equity: Where Challenges Meet Opportunities survey also predicts during the next 20-to-30 years, the millennial generation could put between $15trn and $20trn into US-domiciled ESG investments alone.

The survey, which interviewed a number of LPs, GPs and intermediaries, was conducted in partnership with Coleman Parkes Research.

Of those surveyed, 63% said they believe ESG is driving new business, while 62% of respondents say ESG is having a positive reputational impact.

ESG compliance

According to Vistra, 65% of the GPs who took part said the largest effect of the push to ESG is the added need for compliance, particularly around transparency.

51% said sustainability is creating a bigger demand for better quality information, however 48% recognise it increases their costs to be able to meet these new regulations.

Of those surveyed, 48% of GPs said they are currently compliant with ESG/SRI principles, which includes the United Nations’ Principles for Responsible Investment and the American Investment Council’s guidelines. 38% said they are ‘in progress’ to be compliant, while 14% are currently not compliant.

Challenges

One of the biggest challenges survey respondents recognised is the lack of clear and consistent international standards.

This is one of the reasons the EU is introducing new ESG regulations for harmonised rules across EU member states, and it will be effective from 10 March 2021.

CFA UK also announced in November it had launched the first, formal ESG qualification in the UK for investment professionals, in order to increase the knowledge and skills across the investment sector while providing greater levels of transparency to investors.

Aside from ESG, Vistra’s survey also identified technology as a game changer enabling change within the industry going forward.