Preqin offers ESG benchmark for alternatives

The financial data provider has launched a new ESG fund performance benchmark in what it says is a market first.

The standard covers environmental, social and governance (ESG) fund performance win the context of wider private market asset classes (private equity, venture capital, real estate, private debt, natural resources and infrastructure), excluding hedge funds.

The benchmark assesses more than 1000 ESG funds, as well as impact funds, climate funds, and compliance with Sustainable Finance Disclosure Regulation (SFDR), Sustainable Development Goals (SDG), and Sharia Law.

The yardstick allows investors to assess funds and fund managers as part of their sustainability strategy; it also allows fund managers to assess ESG fund performance and communicate performance outlooks and ESG credentials to investors.

Advisors can use the benchmark to assess new market opportunities and challenges.

The benchmark is a response to a lack of standardised and comparable ESG fund performance data, and the recent increase in anti-ESG sentiment.

It also comes as a response to a need for greater transparency, and a need for better tools and data for investors, fund managers and advisors to use in their investment decision-making when it comes to ESG and impact investing.

Normally, private firms do not have the regulatory duty to disclose such information.

"At Preqin, we look to empower anyone who invests in, allocates to or advises on ESG in Alternatives. Through our benchmark offering, we aim to unleash the power of data to increase transparency around the performance of ESG funds to enable more opportunities for capital to flow to sustainable investments," Preqin's head of ESG solutions and corporate responsibility Jaclyn Bouchard said.

head of benchmarks Fabien Chen added: "With this latest launch, we hope to give practitioners another tool to help them to understand whether ESG funds outperform the market or their non-ESG peers. As we expand and innovate on our benchmark offerings, we will bring further transparency and objectivity to enhance decision making and accountability in the private markets".