A new report by Malk Partners, part of SLR, reveals that while private equity stakeholders remain committed to sustainability, political headwinds—particularly in the United States—are prompting some to reconsider the visibility and branding of their ESG initiatives.
The third edition of Malk’s State of ESG report, based on a survey of General Partners (GPs) and Portfolio Companies managing a collective $2.6 trillion in assets, shows that 99% of respondents continue to embed ESG considerations into their investment processes. These measures include firm-level ESG accountability, due diligence at the investment stage, and active stewardship across portfolios.
However, the findings point to a shifting landscape under the weight of political scrutiny. In the U.S., one in four GPs is considering scaling back ESG integration, and nearly a third intend to reduce ESG-related communication—indicative of the growing influence of anti-ESG sentiment in public discourse.
Despite this trend, Limited Partners (LPs) remain a strong driving force behind ESG adoption, with 87% of GPs citing LP expectations as a key motivator. Moreover, commercial imperatives are increasingly at play: 41% of GPs and 60% of portfolio companies believe ESG practices can yield measurable financial value.
Tracking and managing climate-related risks remains a high priority. The report found a notable year-on-year increase in emissions tracking—58% of GPs and 42% of portfolio companies now monitor their carbon footprints, up 9 and 12 percentage points, respectively, from 2023.
Anastassia Bougakova, Senior Vice President and Head of Multi-Strategy Advisory & Solutions at Malk, noted a shift in how firms position their ESG strategies. “Our research indicates that while ESG terminology may continue to evolve—with 41% of respondents rebranding away from the ESG acronym—there is significant alignment between LPs, GPs, and portfolio companies on core sustainability value drivers, such as climate resilience, employee wellbeing, and supply chain transparency,” she said.
Bougakova added that sustainability is becoming increasingly embedded in business strategy: “Private market companies are seeing disclosure requests not just from investors, but also from customers, regulators, and employees. No matter what we call it, sustainability is becoming synonymous with business resilience—and it’s here to stay.”
