What we do
What | The ESG Data Convergence Initiative is an open partnership of private equity stakeholders committed to streamlining the private investment industry’s historically fragmented approach to collecting and reporting ESG data. Our mission is to create a critical mass of meaningful, performance-based, and comparable ESG data from private companies.
Why | We seek to overcome the disparate constellation of ESG performance assessment frameworks and tools in the private equity industry. Converging as an industry on consistent definitions allows general partners (GPs) and their portfolio companies to benchmark their position and generate progress toward ESG improvements while enabling greater transparency and more comparable portfolio information for limited partners (LPs).
How | To create this convergence, the Initiative’s participating firms agree to report on a core set of ESG metrics drawn from existing frameworks. The categories include greenhouse gas emissions, net zero commitment, renewable energy, board and C-suite diversity, work-related accidents, net new hires, and employee engagement. GPs track the agreed-upon metrics for their portfolio companies and report them in a standardized format. The data are shared directly with invested LPs, and aggregated into an anonymized benchmark by the EDCI’s administrator, Boston Consulting Group (BCG).
Who | The EDCI’s members include 425+ GPs and LPs representing ~$28 trillion in assets under management. In addition, a number of investment advisers and consultants are aligned with the effort. Private Credit firms are welcome to join and leverage the benchmark to support lending decisions and ESG Data Platforms can join to visualize EDCI data in their platform.
ESG categories & metrics
GHG Emissions
Net Zero
Renewable Energy
Diversity
Work-Related Accidents
Net New Hires
Employee Engagement
GPs struggle with a mounting volume of bespoke ESG data requests from their LPs, while their underlying portfolio companies navigate an increasingly complex set of ESG frameworks. In GPs’ interaction with current or prospective portfolio companies, they have been unable to draw on meaningful private market data to develop an understanding of their own relative performance on key dimensions.
The EDCI helps GPs address these challenges. It simplifies their process of reporting to LPs by using standard definitions and templated methods, enabling voluntary in-platform data sharing with LPs, and provides them with benchmark-driven insights into how their portfolio companies compare to their peers.
LPs and investment managers have historically been unable to see meaningful, performance-based, and comparable ESG data across their portfolios.
The EDCI provides LPs with greater transparency on their portfolios by enabling industry-wide convergence on ESG metric collection and data submission. In addition, LPs can more effectively engage with their GPs based on an understanding of GP performance relative to the broader industry while requesting and accessing ESG data from their GPs directly in the EDCI platform.
Private Credit firms are increasingly needing to understand the ESG characteristics of the companies to which they are lending – both to enable their reporting requirements, and also to improve the quality of their investment decision making, effectively linking the cost of borrowing to the risk of the underlying assets. However, historically private credit funds have struggled to access this data, due to a lack of convergence around what to measure.
The EDCI has accelerated convergence around core ESG metrics for the private markets and is improving the availability of consistent, clearly defined, performance-based data. Private credit funds can join the initiative and benefit from accessing the EDCI benchmark, alongside requesting ESG data directly from participating PE GPs.
Driving client engagement, increasing analytical functionality, and developing strategic partnerships are critical for ESG Data Platforms seeking to grow their business.
The EDCI offers Inbound and Outbound APIs which enable Data Platforms to connect with the EDCI to streamline EDCI data submissions for their clients while harnessing the benchmark’s data to unlock insights and increase engagement with EDCI member clients. Platforms are welcome to connect to one or both APIs.
Investment consultants have historically been unable to support their LP clients in harnessing meaningful, performance-based, and comparable ESG data across their portfolios, due to significant fragmentation in ESG data collection.
The EDCI enables ICs to support their LP clients in developing greater transparency on their portfolios by facilitating industry-wide convergence on ESG metric collection and data submission. In addition, ICs can harness the EDCI benchmark to support their LPs in better understanding their portfolios’ performance relative to the broader industry and identify opportunities for constructive engagement with underlying GPs.
EDCI Benchmark Overview
What our members are saying
Current EDCI members
Currently, 425+ total members (300 GPs and 125 LPs/IMs) have committed to the EDCI, representing ~$28T USD of AUM worldwide.