Latest Study Confirms Shift in ESG for Private Market Investors, However, the Imperative of Sustainability as a Value Driver Remains Strong

April 17, 2025 /3BL/ - The latest research from the third ‘State of ESG’ report by Malk Partners (Malk), a company of SLR, surveying Portfolio Companies and General Partners (GP) representing $2.6T in total Assets Under Management (AUM) found sentiment remains strong around delivering on sustainability ambitions, however there is reserved hesitation on ESG given political volatility.

Adoption of foundational ESG programming by portfolio companies and GPs maintains strong momentum, with 99% of survey respondents sharing that they integrate ESG into the investment process with some combination of firm-level ESG accountability, investment ESG diligence, and portfolio stewardship. Nonetheless, the findings reveal a shift in ESG engagement due to political pressure, particularly in the U.S. where a quarter (25%) of GPs may look to scale back their ESG integration efforts, while almost a third (30%) are planning to reduce ESG communication, highlighting the continued influence of anti-ESG sentiment in the political climate.

Despite the retraction of external-facing initiatives, ESG demand by Limited Partners (LP) continue to be a key driver of GP ESG programming (87%). Additionally, many GPs recognize the significant business benefits that can be realized through thoughtful ESG integration, with 41% of GPs citing value creation as a primary motivation for their ESG efforts, while 60% of portfolio companies believe there is potential to capture financial value through ESG.

This notion is further supported by GPs and portfolio companies in their approaches to prioritizing and addressing the challenges of climate and decarbonization. Notably, 58% of GPs and 42% of portfolio companies are now tracking emissions, marking an increase of 9% and 12% from 2023, respectively. While the journey toward achieving ESG-driven value is still evolving, it is evident that underlying sustainability factors are an essential component of success in today’s market.

Anastassia Bougakova, Senior Vice President, Head of Multi-Strategy Advisory & Solutions at Malk says: "Our research indicate that while ESG terminology may continue to shift - with 41% of respondents rebranding away from the ESG acronym - there is significant alignment between LPs, GPs, and portfolio companies on many underlying sustainability value drivers, such as climate resilience, employee wellbeing, and supply chain transparency. GPs continue to integrate ESG data and performance management into their fund-level programming, often at the request of LPs. Meanwhile, private market companies are increasingly seeing sustainability disclosure requests not just from their investors, but from customers, regulators, and employees. No matter what we call it in public discourse, sustainability is becoming synonymous with business resilience and is here to stay.” 

For a more detailed analysis of the research, download the full report: https://malk.com/esg-report/

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About Malk Partners

Malk Partners (Malk) is the leading advisor to private market investors for creating and protecting value through environmental, social, and governance (ESG) management and impact investing. Founded in 2009, Malk has supported many of the world’s top alternatives managers - including those in private equity, growth equity, venture capital, and private credit - by helping define ESG goals, achieve meaningful results, and guide portfolio companies in driving value creation and mitigating risks.

In October 2024, Malk was acquired by SLR, a global sustainability consultancy with over 4,500 technical consulting and strategic advisory professionals across Asia-Pacific, Europe, Middle East and Africa, Canada, North America and Latin America. Combining this global footprint with rich technical expertise and deep strategic knowledge, Malk can leverage expanded capabilities and resources to deliver world-class ESG strategies for its clients. Together, we bring a shared purpose of 'Making Sustainability Happen,' supporting businesses and investors across diverse industries and project life cycles.

For more information, please visit: www.malk.com

About SLR

SLR is a leading global environmental and advisory consultancy, with a team of over 4,400 talented professionals operating from a network of offices in Europe, the Americas, Asia-Pacific and Africa. With the purpose of ‘Making Sustainability Happen’, SLR’s ‘One Team’ of environmental and business consultants, engineers and scientists partner with clients throughout their project life-cycle, from strategy and design, through compliance and operations, to end-of-life and remediation.

Working on diverse and challenging projects, SLR specialises in the built environment, finance, industry, infrastructure, mining & minerals, and power & renewables sectors. Operating across more than 45 technical disciplines, SLR staff help a growing base of business, regulatory and government clients navigate the ever-shifting context of sustainable business.

Find out more about SLR: www.slrconsulting.com