Investing using ESG principles requires access to reliable, timely, and high-quality data about companies’ ESG performance—but investors often find that data hard to come by.
While popular in public markets for some time, demand for ESG adoption has gained significant traction in private markets. Private equity (PE), venture capital (VC), and other private market participants increasingly recognize the value of integrating ESG principles into their investment strategies. A recent study by the United Nations Principles for Responsible Investment (UNPRI) also revealed that 75 percent of PE signatories assess ESG materiality for individual companies in their portfolios. Investor pressure from LPs and the evolving ESG regulatory landscape are compelling general partners (GPs) to measure the ESG performance of their portfolio companies. Furthermore, a report surveying over 300 limited partners (LPs) and GPs shows a shift towards an "ESG or nothing" investment philosophy, with over three quarters of respondents saying that they plan to cease investing in or promoting non-ESG private markets products by the end of 2025. However, limited disclosures from private companies and the lack of a consistent ESG data collection framework across the private markets make it challenging for GPs to track progress on material ESG goals.
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