As the world becomes more environmentally conscious, it’s no surprise that investors are increasingly interested in comparable ESG data. However, the private equity industry has been slow to adopt ESG reporting standards, leading to a fragmented approach to collecting and reporting ESG data. This is where the ESG Data Convergence Initiative (EDCI) comes in.
About EDCI
The EDCI, launched in 2021, is an alliance of over 350 General and Limited Partner members, collectively representing ~$28T AUM and ~4,300 Portfolio companies. The Initiative is committed to streamlining the private investment industry’s historically fragmented approach to collecting and reporting ESG data. The initiative aims to create a critical mass of meaningful, performance-based benchmarks and comparable ESG data from private companies.
To create this convergence, the Initiative’s participating firms agree to report on a core set of ESG metrics drawn from existing frameworks. The categories include:
- Greenhouse gas emissions
- Net zero commitment
- Renewable energy
- Board and C-suite diversity
- Work-related accidents
- Net new hires
- Employee engagement
GPs track the agreed-upon metrics for their portfolio companies and report them in a standardized format. The data are shared directly with invested LPs and aggregated into an anonymized benchmark by the EDCI’s administrator, Boston Consulting Group (BCG).
Understanding the ESG Data Convergence Initiative
Learn more about the ESG Data Convergence Initiative (EDC) and its benefits for private equity firms.
Why Should You Care?
The initiative seeks to overcome the disparate constellation of ESG performance assessment frameworks and tools in the private equity industry. Converging as an industry on consistent definitions allows general partners (GPs) and their portfolio companies to benchmark their position and generate progress toward ESG improvements while enabling greater transparency and more comparable portfolio information for limited partners (LPs).
Why General Partners join EDCI:
- Increase LP Engagement: Enhance your relationship with Limited Partners by demonstrating a commitment to transparent and comparable ESG data.
- Access ESG Benchmarks: Gain access to actionable, performance-based insights based on comparable ESG data. Meaningful benchmarks can identify risks and opportunities while highlighting how your investments compare to peer companies.
- Simplify Data Collection: Streamline the collection of GP ESG data, saving time and resources while maintaining compliance with evolving ESG regulations.
Getting Started
Withum proudly supports the ESG Data Convergence Initiative (EDCI) to create meaningful benchmarks around ESG metrics that drive performance and align with the future of responsible investing.
Choose the ESG metrics and portfolio companies you wish to report on, sign up with EDCI, and allow Withum to take it from there.
How Withum Adds Value: Your ESG Advisory Partner
At Withum, we recognize the transformative power of ESG metrics in driving business success. Our Sustainability and ESG Advisory services are tailored to meet the diverse needs of Private Equity Firms participating in EDCI.
Portfolio Companies
For portfolio companies, Withum works with you to:
- Establish Governance Structures: Implement robust governance and control structures over ESG information, ensuring accuracy and reliability.
- Assist with Data Collection: Streamline the collection and reporting of ESG data to General Partners, reducing complexities and enhancing efficiency.
- Calculate Greenhouse Emissions: Accurately calculate Scope 1 & 2 greenhouse emissions, with optional Scope 3 calculations as required.
General Partners
For General Partners, Withum provides:
- Confirm EDCI Compliance: Ensure ESG PortCo metrics align with EDCI standardized definitions and technical protocols, guaranteeing compliance and accuracy.
- Aggregate ESG PortCo Data: Seamlessly aggregate ESG PortCo data into EDCI-provided templates, simplifying the reporting process.
- Anonymize Information: Prioritize confidentiality by anonymizing all information reported to EDCI, upholding the highest standards of data security.
- Submit ESG Reporting: Trust Withum to submit comprehensive ESG reporting to EDCI by April 30 of each year, meeting deadlines with precision.
Partner with Withum, your trusted guide in navigating the ESG landscape. From best practices advice to full-service outsourcing, we empower you to embrace sustainability with confidence.
Contact Us
For more information, reach out to Withum’s Sustainability and ESG Services Team today!
