CalPERS and Carlyle Dream of Standardize Reporting in ESG for Private Markets

Posted on 10/01/2021

The California Public Employees Retirement System (CalPERS) and The Carlyle Group hope to standardize ESG reporting in private markets. The two parties created the ESG Data Convergence Project to advance an initial standardized set of ESG metrics and mechanism for comparative reporting. Other collaborators joining the project include AlpInvest Partners, APG Asset Management, CalPERS, CPP Investments, Employees’ Retirement System of Rhode Island, PGGM, PSP Investments, The Pictet Group, Wellcome Trust; and general partners: Blackstone, Bridgepoint Group Plc, Carlyle Group, CVC Capital, EQT AB, Permira, and TowerBrook Capital Partners LP.

According to the press release by PSP, “The group’s objective is to streamline the private equity industry’s historically fragmented approach to collecting and reporting ESG data in order to create a critical mass of material, performance-based, comparable ESG data from portfolio companies. This will allow GPs and portfolio companies to benchmark their current position and accelerate progress toward ESG improvements, which the group believes drives better financial outcomes. This will also enable greater transparency and provide more comparable portfolio information for LPs.

GPs will track and report six metrics from their underlying portfolio companies, beginning with calendar year 2021. The data will be shared directly with invested LPs by GPs and aggregated into an anonymized benchmark by Boston Consulting Group (BCG) for this first cycle. The initial six metrics are: Scopes 1 and 2 greenhouse gas emissions, renewable energy, board diversity, work-related injuries, net new hires, and employee engagement.”

The group of GPs and LPs plans to meet annually to assess the prior year’s data, and to refine and build on these initial metrics, prioritizing materiality. This collaboration is intended to be a long-term mechanism to increase the quality, availability, and comparability of ESG data in private markets.

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