Q: Are European managers integrating workforce diversity, labour standards and stakeholder fairness into decisions in measurable ways, or still treating them as nice-to-haves?
Lorna Robertson, head of funds at Connection Capital: Yes, we’re seeing GPs give ESG the proper attention it deserves, with clear KPIs, accountability, and most now having dedicated ESG resources and annual reporting in place. However, some still treat these issues as add-ons rather than essentials. In our view, core ESG elements such as diversity and fair labour practices should be embedded in a business’s investment process from the outset, not added later to tick compliance boxes. Ultimately, this isn’t about being ‘nice’; it’s about sound governance and smart risk management, which typically deliver better outcomes across the board.
Mia Rowlinson, investment analyst, Tyndall Partnerships: In our experience, workforce diversity and labour standards are a part of the decision-making process for ESG fund managers, but not usually in a measurable way. From our conversations, fund managers seem to view these as areas where they can engage with companies, rather than as hard metrics. Even when such engagement does not lead to tangible positive outcomes, many fund managers still record it as evidence that they are considering these issues in their processes.
“Diversity and fair labour practices should be embedded in a business’s investment process from the outset, not added later to tick compliance boxes.”- Lora Robertson
Q: Is social performance becoming a capital-raising differentiator in Europe?
Lorna Robertson: It’s a challenging environment right now to raise capital and LPs are not going to be seduced by a fund focused purely on ‘social performance’, and it’s rather contrived. If the fund has that pure focus then LPs will want to see authenticity and real-world impact, not process and ESG reports purely for marketing purposes.
Mia Rowlinson: Social factors seem to have become more embedded in most funds since the 2022 ESG boom. However, as sustainable investment funds have lost some of their momentum recently, many asset management groups appear to be moving away from using ESG factors to market their funds. We have even seen several sustainable funds remove references to ESG factors in their names, both to appeal to more traditional investors and to align with increased regulatory oversight of how ESG credentials are expressed. From an investor's point of view, the focus still tends to be more on the environmental aspect of ESG, with fossil fuel exposure and carbon dioxide emissions remaining the top concerns raised by clients.
Keimpe Keuning, co-head ESG and impact at LGT Capital Partners: Social performance is becoming a key factor in capital raising across Europe’s investment landscape. It involves measurable contributions to societal well-being—advancing workforce equality, inclusive employment, community strength, fair supply chains,
and product safety. Achieving this alongside financial returns defines impact investing. While environmental factors have long dominated ESG due to clearer metrics and financial links, well-structured social themes can deliver equally significant, often greater impact. Managers who present credible, data-driven social performance are gaining a competitive edge.
Meanwhile, frameworks like the SFDR have heightened demands for transparency and accountability on social factors. Strong social credentials now influence selection, mandate allocation, and long-term investor relationships, making social performance a decisive differentiator in capital raising.
“Many fund managers still treat workforce diversity and labour standards as engagement topics rather than measurable metrics.”- Mia Rowlinson
Q: Is governance scrutiny strong enough in European private assets, and is this something you are flagging in due diligence?
Lorna Robertson: Strong governance has always been a crucial component of our due diligence process when we look at any fund manager, large or small. This is especially important in private markets where there can be higher levels of opacity. We consider the manager's overall approach to governance, both internally and externally, good succession planning, stakeholder alignment, for example, how they manage challenges and conflicts, create boards, and ultimately, whether they are taking accountability for their actions. When it comes to their approach to ESG, again, it shouldn’t be treated as a theme; it’s just part of a proper investment
process.
Mia Rowlinson: We don’t invest in private assets, or in funds that hold them, so this isn’t something we have oversight of.
“Social performance is emerging as a key differentiator in capital raising, as investors seek credible, data-driven impact on equality and communities.” – Keimpe Keuning
Keimpe Keuning: Governance scrutiny in European private assets has intensified, driven by tighter regulation and rising investor awareness of governance risks. Due diligence is now more comprehensive, emphasising board composition, decision-making transparency and alignment of interests between managers and investors.
At LGT Capital Partners, governance is directly assessed within our ESG due diligence. We review conflicts of interest, succession planning, and the strength of internal controls in risk management, seeking opportunities to enhance governance during and after the investment period.
While progress has been made, improvement is needed to ensure governance frameworks are not only well-documented but effectively implemented. Continuous monitoring, active engagement and readiness to challenge management remain essential for maintaining high standards and mitigating governance risks in private assets.
