Climate risk: The new 'E' in ESG(?)

The Drawdown explores Unwritten's research on how the world's largest LPs view climate risk, concluding that climate risk is emerging as a distinct category within LPs' environmental considerations.

Unwritten's report, Shifting Expectations — Limited Partners and Climate Financial Risk, surveyed the 100 largest LPs, which together allocate $2.6trn to private markets. Of these, 68 require GPs to assess climate-related financial risk. LPs are increasingly treating climate risk n single-materiality terms, meaning they focus on the financial risk climate poses to their investments.

The article highlights Unwritten's key findings. Outside the US, 80–100% of LPs require or expect climate risk assessments, led by Europe, compared with just over half in the US. Of the LPs requiring assessments, 47% expect TCFD-aligned reporting, alongside integration into the investment process and active risk management through the hold period. LPs place noticeably less weight on emissions targets.

Unwritten’s research describes climate risk as a systemic risk that LPs cannot control directly, so the pressure passes down to GPs.

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