Private markets managers should adopt ESG reporting standards now to prepare for potential regulations in the future that makes voluntary disclosures mandatory, according to David Korngold, a director at the consultancy Business for Social Responsibility.

“We’re in a really interesting moment where I think a lot of frameworks that have been the product of collaboration between industry and investors and stakeholders are moving from voluntary to regulatory,” Korngold told New Private Markets during a panel last week at PEI Media’s Investor Relations Global Forum

“If you want to understand where the field is going, you need to be involved in these processes,” Korngold said, adding that the industry’s lack of “unifying ESG standards” has contributed to “confusion and misalignment” among investors and their GPs.

With so much ESG “regulatory uncertainty”, Christine Anderson, Blackstone’s global head of external relations, cautioned that firms have to “think really carefully about every statement” that’s made about a manager’s processes and integration. Her advice is to back every ESG-focused statement with facts and data and make sure to “document as you go”.

“If you’re coming up with a bold, new, innovative approach, you really have to document what you’re doing, how you’ll get there,” Anderson said. “The more [ESG] is knitted into our core business functions, where we have longstanding compliance functions and whatnot, I think all of this will become very natural over time.”

Stacie Selinger, head of investor relations at the institutional investor advisory GCM Grosvenor, agreed but added that there’s greater “onus” for longtime ESG-conscious managers to help set examples for the rest of the industry.

It’s about “staying ahead of the curve,” Selinger said. “It’s a combination of trying to set an example but also being flexible enough that we can evolve.”