A group of leading private equity investors, including both GPs and LPs representing more than $4 trillion in AUM, announced the launch of the ESG Data Convergence Project, a new initiative aiming to streamline the industry’s approach to collecting and reporting ESG data.
Led by the California Public Employees’ Retirement System (CalPERS) and global investment firm Carlyle, the project will see GPs tracking and reporting ESG metrics from their underlying portfolio companies, starting with factors including greenhouse gas emissions, renewable energy and board diversity, among others. According to the group, the initiative will allow GPs and portfolio companies to benchmark their current position and accelerate progress toward ESG improvements, while enabling greater information transparency and comparability for LPs.
The investors also believe that the push for improved ESG performance will drive improved financial outcomes.
Marcie Frost, CalPERS CEO, said:
“This initiative simplifies sustainability reporting by using comparable metrics which allow us to gain insight into the investment risks and opportunities in our private markets portfolio. Managing these risks and opportunities is essential to fulfilling our fiduciary duty to provide retirement security to our 2 million members. Collaboration between the GP and LP community is the foundation, and we look forward to building out this important work.”
Participating firms in the initiative include GPs Blackstone, Bridgepoint Group Plc, Carlyle, CVC, EQT AB, Permira, and TowerBrook, and LPs AlpInvest Partners, APG, CalPERS, CPP Investments, Employees’ Retirement System of Rhode Island, PGGM, PSP Investments, The Pictet Group, and Wellcome Trust. Boston Consulting Group will aggregate the data provided by the GPs, and generate an anonamized benchmark for the project.
The group will meet annually to assess the data, and to refine and build on the initial metrics, with a priority placed on materiality.
Peter Branner, Chief Investment Officer at APG Asset Management, said:
“Through this collaboration, we expect to push towards comparable ESG performance measurement and wider adoption of ESG as an integrated objective of PE investments. APG will use the metrics in its engagement with managers.”