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ESG strategies to ‘reboot’ European private markets, says PwC

In a study on sustainable investment in Europe, the firm forecasts that ESG assets in European private markets are set to skyrocket to between €775.7bn and €1.2trn by 2025.

This would mean that ESG strategies would account for between 27.2% and 42.4% of European private markets.

“The sheer extent of Europe’s predominance in this realm will ultimately see the region’s
influence transcending physical borders and spilling across the global landscape,” the report stated.

PwC said that this “explosion” in sustainable investment will see Europe alone making up between 31% and 36% of global private markets ESG assets.

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The report said the surge in ESG assets will be largely propelled by the rapid expansion of private markets themselves, as well as the increased prevalence of ESG as a central investment ethos, highlighting four key drivers set to alter the fabric of the investment industry.

According to PwC, shifting societal values, changing investor behaviour, policy shifts, and increased recognition of ESG’s value creation, will all play a part in boosting growth in private markets.

Real assets, in particular, are set to stand at the forefront of this surge, the research suggests.

ESG assets in the private markets are expected to account for 33.7% and 40.6% of real estate and infrastructure’s total respective assets under management by 2025.

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