Italian schemes bolster ESG standards in private equity allocations

Italian industry-wide pension funds (Fondi Negoziali) are increasingly applying ESG standards to private equity investments.

According to a report on ESG and investment policies of Italian institutional investors published by think tank Itinerari Previdenziali, 21% of industry-wide pension schemes apply ESG criteria to allocate to private equity, a steep rise from the 7% recorded in 2023.

However, occupational, pre-existing and first pillar schemes (Casse di Previndeza) still shy away from handing out specific mandates for asset management linked to sustainability goals, the report added.

The majority (74%) of first pillar pension schemes directly purchase financial products meeting ESG criteria, mostly traditional mutual funds (86%) and Alternative Investment Funds (AIFs) linked to the infrastructure sector (71%), private equity (64%) and renewable energy funds (57%).

The report also disclosed that 57% of Italian institutional investors directly buy private equity products in line with ESG criteria, 50% in infrastructure and 36% in private debt according to ESG standards.

Addtionally, 53% of the investors surveyed by Itinerari Previdenziali adopt sustainable investment policies. Almost half of the investors opt not to pursue sustainable investments because costs are high, or don’t believe that they can generate higher returns, among other reasons, it added.

Investors apply sustainable and responsible investment policies to between 75% and 100% of their assets under management. However, only 9% of investors survey plans to pursue sustainable investment strategies for the largest share of its assets in the future.

Institutional investors in Italy tend to rely on a small number of ESG providers, a trend that cemented in the last three or four years, according to the report.

Among the providers, investors pick mostly Nummus.Info (31%), followed by Prometeia (25%), and Moody’s ESG Solutions (9%).

Institutional investors rank Eurizon Capital, Etica, Anima, Generali Asset Management, and Azimut among the Italian asset managers that are more interested in ESG topics and sustainable investing.

They rank Amundi, BlackRock, Candriam, BNP Paribas Asset Management and AXA Investment Managers among the international asset managers looking closely at ESG and sustainable investing.

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