The European Union's new Sustainable Finance Disclosure Regulation, or SFDR, is expected to drastically change the scope of sustainable investing by providing greater transparency and increasing disclosure. And this is a particularly big deal for the private equity world, which has historically relied on self-regulation.

Broadly speaking, private equity refers to investments in or ownership of private companies, and in this episode, we ask how SFDR is impacting the private equity industry. We hear from Sophie Flak, managing partner in charge of ESG at French investment firm Eurazeo. Sophie was a member of an EU expert group that put in place some recommendations on SFDR. She says that the industry has a long way to go on ESG, and this new regulation will help drive progress and transparency.

"But the road is a bumpy one," she adds.

We also talk to Andy Pitts-Tucker, who works closely with private equity firms in his role as managing director of APEX ESG Ratings. He expects that SFDR will require "a significant leap" for a majority of the industry. "ESG is quite new to a lot of people in the private market world," Andy says.

SFDR comes from the EU, but has a reach that extends far beyond Europe. Andy says international regulators are watching closely and learning.

"It's a game-changer," he tells us. "What we're certainly going to see is regulators around the globe adopting their own policies."

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