The ESG Data Convergence Project was only launched in 2021 and has already attracted commitments from over 100 general partners (GPs) and limited partners (LPs) from across the world.
The project aims to standardize ESG metrics so that private equity investments can be compared across portfolios, and across funds.
The framework expects investors to collect data on carbon emissions, workplace accidents and gender diversity.
The commitments represent almost $US9 trillion in AUM and captures some 1,400 companies. Recent big-name additions to the list include Apollo Global Management, Goldman Sachs AM, Hermes GPE, and Oaktree.
It’s being led by Carlyle Group and California Public Employees’ Retirement System, with BCG developing framework.
PE investors have been slow to adopt ESG methodologies, and this project aims to streamline the fragmented frameworks and build broader adoption. Consistent data capture will help with transparency and comparability, but it will also include engagement with portfolio companies, building capacity as part of their internal systems.
Work will begin this year, with GP’s tracking and reporting on the metrics. The data will be shared with LPs, and BCG will aggregate the results into an anonymized benchmark.