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.
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.
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Providing ESG data and analytics on GPs, LPs, funds and assets, our robust quality assurance and advanced data modeling techniques ensure in-depth and actionable insights. Combined with over 20 years of experience and trusted client relationships, this enables us to deliver high-quality intelligence.
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