“To what extent are firm’s actions on ESG actually contributing to national and global ESG goals, or are firms doing a lot of reporting without changing their strategy?”

Trust a room full of CFOs to get down to brass tacks when it comes to allocating resources to ESG. The above question, posed by an attendee at the Private Funds CFO Network Europe Forum in London this week, will likely strike a chord with many investment professionals who don’t consider sustainability to be their main focus.

Given the alphabet soup of legislation and reporting frameworks, and the ever-present threat of greenwashing, it’s not surprising that conversations about ESG often gravitate towards the compliance and disclosure end of the spectrum.

That was the case when the Responsible Investment Forum: Europe brought ESG professionals from across private markets to London last week. There, ESG data was the topic du jour, with panellists being asked questions on topics familiar to New Private Markets readers such as auditability, standardisation frameworks and handling LP requests.

Clearly, reporting and compliance are fundamental parts of the ESG in practice. Creating standardised and transparent reporting frameworks is critical to ensuring accountability among managers and tracking contributions to ESG goals. For these frameworks to have any worth, gathering high-quality input data is essential. What gets measured gets managed, as is often heard in these conversations.

But at the same time, meeting reporting obligations should not be the end goal. Every hour spent putting together reports is one that can’t be spent engaging with portfolio companies to actually deliver improvements and create value.

ESG professionals are aware of the need to clear the reporting hurdle as much as anyone. “Yes, there’s reporting, but this goes back to the nub: you really need to focus on the outcome,” as one sustainability head said in response to the CFO’s question.

On a related note: anti-ESG political discourse in the US (ludicrous as it has often been) may have encouraged private markets firms to focus more squarely on outcomes. Over coffee this week, one European private equity sustainability chief told NPM that there had developed a “do it, but just don’t talk about it” attitude to sustainability initiatives among US firms and companies. While keeping relatively quiet about it, US firms have made significant progress.

Bain Capital’s Tricia Winton described outcomes and value creation as the “real juice” of ESG earlier this week. Sustainability professionals should keep that in mind, especially when speaking to their CFOs.