ESG from 'nice to have' to prerequisite for almost all LPs – survey

Of this 98%, 68% of participants said that ESG is a determining factor, while 30% said that it is taken into account, although there are no investment restrictions.

The survey highlights the growing importance of ESG, with just 81% of investors surveyed saying that ESG considerations affected their investment decisions in 2021. Of this 81%, 46% said that they had a strategy that included ESG as a factor, while 36% said they took ESG into account but did not have restrictions.

The 2022 Global Investor Survey takes into account the views of 118 LPs, including pension funds, institutional accounts, and portfolio managers located in the US, Europe, and APAC. The research was conducted over the six weeks leading into 2022, according to the report.

LPs participating in the survey were also asked to highlight sectors that they expected to offer the best market opportunities. For the second year in a row, technology and technology services (33.6%), healthcare (31.8%) and financial services (38.2%) were highlighted by participants as the sectors offering the most opportunity.

Sectors with notable falls in popularity included telecommunications (down by 14.4% to 29.1%) and travel and hospitality (down by 14.4% to 20.9%). However, software saw a 20.3% increase in interest, with the sector cited by 15.5% of survey participants.

In addition, 92% of participants indicated that their companies are likely or very likely to invest in digital assets backed by blockchain technology in the next two years, indicating the growing acceptance of digital assets to institutional investors.

The overwhelming majority (86%) of investors surveyed expect that private markets will outperform their public market equivalents in the long term. Further analysis in the survey highlighted the opportunities presented by public market buyouts, in light of the recent decline in public market valuation.

The survey also gauged LPs views on risk scenarios expected to impact their private market investment strategies in 2022, with the vast majority (87%) saying that they remain cautious of the continued impact of the coronavirus pandemic. Increasing anti-globalist policies (85%), sovereign defaults and financial contagion (84%), and rising interest rates (84%) were also high-up on LPs' lists of concerns. Geopolitical instability was cited by 83% of LPs, although the research was conducted prior to the outbreak of war in Ukraine.

Taking into account geographic preferences, almost half (44%) of the LPs surveyed said that the APAC region offers the best investment potential in 2022. A further 23% cited Europe, with 24% ranking North America first in terms of the opportunities that it offers.

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• LPs
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