Preqin ESG Solutions 28 • Monitor ESG risk year-over-year with annually updated exposure and performance estimates, even when information provided by the fund you’re invested in is limited. The main purpose of ESG Risk Exposure Estimates is to ESG risk measure an investment’s exposure to ESG risk factors. The key exposure stakeholders exposed to this risk cover a broad range – from 昀椀rms, their shareholders and employees, through municipalities and how we and governments, to the natural world. To evaluate ESG risk exposure, we 昀椀rst identify the sources of risk, then evaluate measure it their relative magnitude – which could materialize as costs to individuals and 昀椀rms, and damage (impact) on the natural world. We begin by calculating ESG risk exposure at the portfolio company level, for the 245,000+ private companies on our database. • Every time an investment fund makes a deal, it acquires a fraction of an existing business. • The pre-existing risk at the level of the acquired company contributes to the risk of the resulting investment portfolio. This, in turn, enables us to identify exposure to risk at the level of a particular fund. • Since each fund has an identi昀椀ed owner, the 昀椀nal step of the aggregation provides an overview of material ESG risk exposure at the level of an individual fund manager 昀椀rm. The risks identi昀椀ed as the most prominent for a given fund or a speci昀椀c fund manager are deemed to be the most likely to generate surprises, adversely a昀昀ecting stakeholders. We refer to this holistic process of quantifying risk at di昀昀erent levels as ‘measurement of risk exposure at scale’. Preqin ESG Risk Exposure Estimates is the only solution on the market that measures ESG risk exposure at scale on private markets – whether that’s a single deal, a portfolio or at institutional investor level. Risk measurements range from 1 to 10, with 10.0 representing the highest and 0.0 the lowest. Comparing scores within a single portfolio company gives an insight into “how material a given ESG issue is relative to others – whereas comparing scores across portfolio companies reveals “how material a given issue is to this company relative to other portfolio companies”. ↗ Back to Contents