Private assets: The next frontier in ESG risks and opportunities in Europe

The rise of sustainable investing has been one of the most significant changes in the investment industry in a generation. Sustainably managed assets represent about 36 percent of total assets under management (AUM) globally, the bulk of which are invested in public markets. Focus is rapidly turning to private markets, where ESG-linked assets could account for between 27 percent to 42 percent of the entire private markets sector in Europe by 2025, compared to today’s 15 percent, according to Fidelity International in its Building ESG into Private Market Portfolios white paper, which explores why ESG is playing a more central role in private markets, where public markets can provide guidance for navigating private markets and sets out a framework to help investors be stewards of change in private markets while optimizing portfolio returns.

“Rapid growth in sustainable investing has been concentrated in specific geographies and primarily public markets, pa