Despite the progress made in ESG reporting in recent years, a report by KEY ESG has found widespread confusion over how to report such data remains an issue for portfolio companies. The study found that while 75 percent of private equity funds are required to report on ESG to their LPs, 90 percent of portfolio companies are unsure of how to provide their owners with the data they require.
There appear to be a few things driving this confusion. Geography plays a large part, with around 75 percent of US GPs saying they are unclear about which Europe-based fund regulations apply to them. Also, 20 percent of GPs surveyed said they began independently measuring ESG in the past decade and are struggling to align their in-house methodology with emerging industry standards.
Private markets have “significant hurdles to navigate to successfully drive ESG”, said Heleen van Poecke, KEY ESG’s chief executive.