European private capital industry strengthens its ESG commitments, new report shows

• Despite massive shifts abroad, European private capital demonstrates leadership in responsible investing

• 90% of European private capital firms have ESG management processes, up 12 percentage points

• Data now covers 1,167 firms (+10%), 3,233 funds and 6,902 portfolio companies

Brussels, Belgium, 6 March 2025 1100 AM CET - Invest Europe, the association representing Europe’s private equity, venture capital, listed private equity and infrastructure sectors, as well as their investors, today published the third annual edition of its Environmental, Social, Governance (ESG) Key Performance Indicator report, which shows a clear step up in ESG and climate commitments, underlining the central role of sustainability, social initiatives and governance standards for European private capital. Massive policy shifts outside of Europe on ESG are in sharp contrast to the reality of European private capital’s continued commitment to sustainability. Maintaining a steady course in responsible investing means our industry, now more than ever, is demonstrating resilience and leadership on the global stage.

The publication entitled ESG KPI Report: Managing what you measure features 2023 data from 1,167 firms, a 10% increase on the previous year, and covers 3,233 funds and 6,902 portfolio companies. It tracks performance on key metrics, including the incorporation of ESG processes, carbon emissions, female representation, and anti-corruption measures. It also looks at adoption of EU regulatory standards, further highlighting the transparency of firms’ commitments.

• 90% of firms had ESG investment and portfolio management processes in place in 2023, a 12-percentage point increase on 2022, including 97% of buyout firms, demonstrating near total integration of ESG practices across the European buyout industry

• 17% of private equity- and VC-backed companies had committed to becoming Net Zero, a three-percentage point increase on the same companies surveyed in 2022. A third of private equity-backed companies had an environmental management system, also a three-percentage point increase on 2022 levels, the majority of which were third-party certified. Buyout stage companies had higher levels of commitment to Net Zero and environmental management systems, reflecting the high level of financial and human resources required by such initiatives.

• Women held 38% of full-time equivalent roles at companies in the study, in line with the previous year’s report. Women held on average 18% of board seats, a decline on 2022 levels, although the number of companies submitting data increased by 64% - indicating willingness to share diversity data and create a baseline from which to improve.

Invest Europe’s ESG KPI Report: Managing what you measure digs into fund-level data to show how private capital firms are responding to European regulatory standards and investor expectations. 84% of 2023 vintage funds from managers who are subject to SFDR rules were classified as Article 8 or 9, meaning they have ESG considerations at their heart. That compares to 12% of active funds before 2007. Even private capital firms who are not subject to SFDR are adopting the standards, with 45% of their funds categorised as Article 6, 8 or 9, signaling rising levels of transparency before investors.

The study also demonstrates ongoing industry commitment to anti-bribery and corruption policies, as well as initiatives to manage cybersecurity risks. And it tracks companies’ Scope 1, 2 and 3 GHG emissions, and renewable energy use, to help build a record on critical ESG and climate issues.

Eric de Montgolfier, CEO of Invest Europe, commented:

“The commitment to measuring ESG impacts is a powerful driver of progress, as shown by the significant rise in European firms with ESG processes in place. Today, ESG considerations are deeply embedded in private capital investment decisions and operational management, fostering higher sustainability standards and greater transparency across the continent.”

“Commitments at the manager level play a crucial role in shaping company behavior. The growing number of businesses with environmental management systems and Net Zero pledges underscores how private equity and venture capital firms are building stronger, more sustainable businesses—benefiting both Europe’s people and environment.”

Invest Europe’s ESG KPI report was developed to create a transparent record of European private capital’s performance on sustainability issues, and to encourage and enable more European firms to track, measure and manage their impacts on climate change, diversity and governance standards. It is part of a comprehensive suite of data and guidance, which includes the ESG Reporting Guidelines and recently updated ESG Reporting Template, as well as tools for members to establish ESG policies, meet European regulatory standards, and adapt to climate change, among others.

To read the ESG KPI Report: Managing what you measure, please click here.

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Invest Europe is the association representing Europe’s private equity, venture capital and infrastructure sectors, as well as their investors. We have over 650 members, split roughly equally between private equity, venture capital and limited partners – with over 100 associate members representing advisers to our ecosystem. Those members are based in 57 countries, including 42 in Europe, and our GP members manage 60% of the European private equity and venture capital industry’s €1.15 trillion of assets under management. Businesses with private capital investment employ 10.9 million people across Europe, 5% of the region’s workforce.