Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• 50% of 171 private equity managers have good or very good ESG practices (increase of 14 percentage points over the previous year).

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: PRI

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity & Inclusion
• Governance
• Sustainable Development Goals (SDGs)
• Supply Chain Sustainability

Environmental Achievements

• 81 metric tons of carbon saved by Global Equity Strategy over benchmark
• 46% of LGT Sustainable Bond Strategy comprised of green bonds
• Significant reduction in carbon emissions across various strategies compared to benchmarks (18% to 42% lower)

Social Achievements

• 1,426 net jobs created in private debt portfolio companies
• 59% of private equity co-investment companies have diversity initiatives
• Initiatives to improve workforce diversity at LGT Capital Partners (joining Advance – Women in Swiss Business, revised recruiting processes)

Governance Achievements

• 65% of private equity managers achieved top ESG ratings (1 or 2), indicating institutionalized ESG processes
• Improved ESG ratings for many managers across different asset classes
• Implementation of a system to monitor ESG controversies in private equity portfolios (partnership with RepRisk)

Climate Goals & Targets

Environmental Challenges

• Varying levels of ESG integration across different regions and manager sizes
• Limited ESG data availability for certain asset classes (e.g., hedge funds, insurance-linked strategies)
• Challenges in applying ESG frameworks to specific investment strategies (e.g., relative value, CTA/macro hedge funds)
• Lack of standardized ESG reporting and metrics across portfolio companies

Mitigation Strategies

• Manager engagement to improve ESG practices, particularly for lower-rated managers
• Development of an SDG assessment module in ESG Cockpit
• Collaboration with data providers to improve ESG data availability
• Publication of a guide to ESG integration in private equity
• Development of a framework for assessing the SDG impact of companies and portfolios

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• ZyroFisher's code of conduct requiring adherence to UN ILO conventions, safe working conditions, and cooperation with audits

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Investment in renewable energy companies

Reporting Standards

Frameworks Used: Principles for Responsible Investment (PRI), UN Sustainable Development Goals (SDGs)

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 3 (Good Health & Wellbeing)
• Goal 7 (Affordable and Clean Energy)
• Goal 13 (Climate Action)

Framework developed to assess the impact of companies and portfolios on the SDGs

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• PRI awarded LGT CP scores of A or A+ across all modules in its annual RI Assessment Report (2018)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity and Inclusion
• Sustainable Development Goals (SDGs)

Environmental Achievements

• 61 metric tons of CO2 saved by Global Equity Strategy over benchmark
• IFCO co-investment significantly reduces CO2 emissions and waste in food supply chain (up to 60% less CO2, 86% less solid waste)

Social Achievements

• 50% of private equity managers have D&I policies in place
• 60% increase in high school graduation rates from impact investment in Weld North Education
• Increased diversity in senior promotions at LGT CP (over 25% in 2020)

Climate Goals & Targets

Environmental Challenges

• Difficulty in precisely defining ESG success and achieving desired outcomes
• Regional variation in ESG practices among managers (Europe leading, US lagging)
• Limited data availability on ESG performance in private equity
• Challenges in measuring impact of impact investments

Mitigation Strategies

• Shifting focus from process to outcome orientation
• Active engagement with managers to improve ESG practices
• Development of proprietary methodologies for ESG assessment (e.g., SDG footprint, Paris Agreement alignment)
• Development of ESG best practice guide
• Use of ESG share classes for hedge funds not meeting ESG expectations

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes
• Shifting market preferences

Opportunities

• Green innovation
• Investments in renewable energy

Reporting Standards

Frameworks Used: Principles for Responsible Investment (PRI), Task Force on Climate-related Financial Disclosures (TCFD), UN Sustainable Development Goals (SDGs)

UN Sustainable Development Goals

• SDG 3 (Health and Well-being)
• SDG 11 (Sustainable Cities and Communities)
• SDG 12 (Responsible Consumption and Production)
• SDG 14 (Life below water)

Investments in healthcare, elderly care, and companies supporting circular economy

Awards & Recognition

• PRI awarded LGT CP scores of A or A+ across all modules in 2020

Environmental Metrics

ESG Focus Areas

• Diversity and Inclusion (D&I)
• Climate Change
• Sustainable Development Goals (SDGs)
• Environmental factors
• Social concerns
• Governance

Environmental Achievements

• 85% of respondents integrate ESG into investment decisions (increase of 10 percentage points from 2019)
• 88% of respondents with climate change policies measure carbon intensity or footprint of investments
• 45% of investors measure carbon footprint for all or majority of investments

Social Achievements

• Nearly half (48%) of respondents have a D&I policy in place
• 35% of respondents take D&I factors into account in investment decision-making
• 63% of investors show a willingness to incorporate D&I into practice

Governance Achievements

• 73% of respondents considered ESG relevant or very relevant when appointing alternative investment managers
• 54% of respondents would exclude a manager because of ESG concerns
• 48% of investors demonstrate high ESG conviction in 2022 (compared to 32% in 2019)

Climate Goals & Targets

Environmental Challenges

• Just under half of investors still do not have a climate change policy in place
• Some investors believe ESG negatively impacts risk-adjusted returns
• Concerns about greenwashing related to SDGs
• Difficulty translating SDGs into investable opportunities and measuring their impact
• Significant regional variations in D&I adoption

Mitigation Strategies

• 36% of investors plan to implement a climate change policy within the next two years
• Increased focus on regulation for ESG, providing clearer standards and data sources
• Investors are increasingly quantifying ESG data and measuring its financial impact
• Growing number of investors assessing SDG impact and setting target allocations

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity, Equity, and Inclusion (DEI)
• Sustainable Investments
• Principle Adverse Impacts (PAI)
• Good Governance

Environmental Achievements

• Increased proportion of managers assessing and measuring climate change-related risks and opportunities (55% in 2023 vs. 32% in 2021).
• Increased proportion of managers monitoring greenhouse gas (GHG) emissions (48% in 2023 vs. 28% in 2021).
• Alignment of eight LGT CP private equity offerings with Article 8 requirements under SFDR and one with Article 9 requirements.
• GHO Capital's anaerobic digester project resulting in GBP 2 million energy savings in 2022 and projected GBP 4 million in 2023, plus GBP 6.5 million in additional revenue.

Social Achievements

• Increased proportion of managers with a DEI policy in place (69% in 2023 vs. 50% in 2021).
• Increased proportion of managers considering DEI when selecting investments (56% in 2023 vs. 51% in 2022).

Governance Achievements

• Alignment of flagship private debt strategy with Article 8 requirements under SFDR.
• Launch of dedicated private debt impact strategy in 2023, aligning with Article 9 requirements under SFDR.
• Improved ESG ratings for several managers due to enhanced ESG practices.

Climate Goals & Targets

Environmental Challenges

• Limited availability and quality of ESG data in the private equity industry.
• Lack of common reporting standards on ESG data for private companies.
• Challenges in applying the EU Taxonomy due to lack of reliable company-level data and limited coverage of economic activities.
• Lack of a clear SFDR framework for hedge funds.

Mitigation Strategies

• Participation in the ESG Data Convergence Initiative (EDCI) to streamline ESG data collection and reporting.
• Leveraging alternative data sources, including a proprietary ESG Cockpit, for proxy analyses of PAI indicators.
• Developing a proprietary impact framework and partnering with Upright for data-driven impact quantification.
• Focusing on LGT CP's own ESG process and customization capabilities for hedge funds, while pushing underlying managers to increase their ESG ambitions.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes

Reporting Standards

Frameworks Used: SFDR, EU Taxonomy, TCFD, UN Global Compact, OECD Guidelines for Multinational Enterprises, UN Guiding Principles on Business and Human Rights, SASB

UN Sustainable Development Goals

• SDG 11 (Sustainable Cities and Communities)
• SDG 13 (Climate Action)

Investments in ILS support SDGs 11 and 13; impact strategies invest in climate action, healthcare, and inclusive growth.