GPs challenged on ESG reporting

The private equity industry should work together more to provide greater transparency and crisper reporting on their environmental, social and corporate governance (ESG) initiatives. 

That was the message of a recently released BSR report which reviewed the responsible investment reporting of the ten largest private equity firms both in the US and Europe, as ranked by in-house research the PEI 300.

The report  found that although ESG reporting is on many firms' agenda, the quantity and quality of reporting fails to “adequately meet the needs and requirements of LPs”. The challenges around ESG reporting was previously detailed in a PE Manager commentary piece available here. 

The report's findings come in spite of a recent Mercer report which claimed that private equity firms are the best financial institutions at achieving high ESG standards. 

To combat a lack of transparency in responsible investment reporting, the report recommends the industry collaborate in creating a common reporting framework that features best practices provided by organsiations including the Global Reporting Initiative, the United Nations, and the International Integrated Reporting Council.

BSR further suggests firms engage stakeholders and LPs so that their ESG reporting expectations can be made clear. GPs for instance could tailor their reports to specific LP demands and incorporate ESG disclosures into their quarterly reports.