Additional Resources: Responsible Investing Framework for Private Equity
Reimagining the role of private equity to scale stakeholder value creation
Additional Resources
LPs are currently using a range of different reporting tools to track ESG investments as well as to screen their GPs
Tools for Assessing Performance by the GP:
- ILPA ESG Assessment framework – is a resource built for LPs looking to create their own tool to understand and evaluate different stages of the ESG integration amongst GPs in the market. It is designed to assist LPs in their evaluation and benchmarking of GP responses to due diligence questionnaires regarding measuring ESG integration progress over time.
- PRI DDQ – A framework developed by the UN Principles for Responsible Investment team aides LPs understand and evaluate a GPs process for incorporating material ESG risks and opportunities into their investment practices. Incorporated into the ILPA. Many custom DDQs developed by GPs and LPs incorporate the PRI framework.
- Preqin – is a data and insight management tool designed to help LPs and GPs make informed decisions. One of their products, Colmore, is geared towards providing LP solutions to due diligence and portfolio monitoring. The tool helps LPs manage invested funds and portfolio company data in real time.
- InvestEurope – InvestEurope provides ESG reporting guidelines and a framework that helps investor/LPs understand their GP’s approach to sustainability and the main impacts of its investments on relevant sustainability factors.
- ESG Data Convergence Initiative – EDCI provides a core set of environmental, social, and governance metrics for the private equity industry drawn from existing frameworks.
Tools for Assessing Performance by the Portfolio Companies:
- SASB – The Sustainability Accounting Standards Board. SASB standards assist in helping companies disclose sustainability information to their investors. These standards are used by many different stakeholders and are a good starting point for those new to ESG.
- MSCI - MSCI powers better investments by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios using data-driven tools and solutions. MSCI offers a range of tools such as ESG ratings, ESG data solutions, ESG indexes, and ESG analytics. MSCI has launched a private assets analytics framework in their RiskManager tool. It allows modeling of private assets to identify main sources of risk.
- Sustainalytics - A Morningstar company, provides investor solutions over ESG research (risk ratings, compliances & ESG screening solutions), Climate solutions data, and specific analytic and reporting solutions. They have expanded their ESG ratings coverage to cover Private Equity.
- CDP - Provides a reporting framework for suppliers and portfolio companies on climate and water, amongst other environmental topics.
- Novata - Private markets resource for ESG Metric Selection, Data Management, and benchmarking.
NYU Stern would like to thank Arthur D. Little for providing a pro bono secondment to support the development of the GP tool, Investindustrial for contributing grant funds and expertise, ClimateWorks for providing a grant for the development of these tools and the U.S. Endowment for Forestry and Communities for helping to fund the first phase of research.
A Responsible Investing Framework, Insights, and Cases Toward a Positive Pathway
An analysis of the Responsible Investing Framework’s key findings and real-world applications. The whitepaper walks through each category with examples of problematic and positive PE practice, providing insights into pathways that provide positive results for shareholders, portfolio companies, and society.
TCDF Implementation: Considerations for Private Equity
Private equity (PE) firms and their portfolio companies (PCs) have a critical role to play in the transition to a low-carbon and climate-resilient economy. The purpose of this document is to support PE firms along their climate journey. It was developed by KPMG at the request of Initiative Climat International (iCI) and the British Private Equity & Venture Capital Association (BVCA) in response to calls from PE firms for practical guidance on climate disclosures that considers the specific context of investors in private markets as well as the diversity in approaches to climate across firms. It also seeks to satisfy the needs of private markets investors for comparable disclosures across firms.
Based on detailed input from a wide range of firms and other stakeholders (including the TCFD itself), the guide is a comprehensive tool that offers detailed practical suggestions on how different firms can use the TCFD recommendations in their climate reporting, either voluntarily or under FCA regulations.
The guide signposts practical tools that already exist, highlights how TCFD reporting can support firms’ understanding of climate risks and opportunities, and proposes a banded approach that reflects different firms’ different characteristics and priorities.