In a rapidly changing world, Carlyle believes that impact is a lens for finding efficiencies and capitalizing on new growth, as we see the market valuing a wider set of business models and competencies. By helping our portfolio companies improve across these dimensions—from creating sustainability-driven growth strategies to building more diverse teams—we believe we will build more valuable businesses and deliver better results for all stakeholders.

ESG data is a critical to understand and advance ESG improvements in companies over time. Its current state, however, is incredibly challenged. Investors can’t see standardized, comparable ESG data across their portfolios, asset managers are struggling under a mounting volume of bespoke ESG data requests, companies are sorting through an increasingly complex set of ESG frameworks and standards, and broad-based data about ESG performance for private equity-owned companies doesn’t exist in the market.

In order to address these challenges, we needed to take a long-term view on strategy and aspiration, but a near-term view on tactical implementation. To this end, in 2021, we co-led the creation of the ESG Data Convergence Project alongside CalPERS and a number of our other LP and GP partners, forming the first-ever GP-LP cohort to create a critical mass of material, performance-based, comparable ESG data from portfolio companies.

GPs and portfolio companies benchmark ESG positions and track progress / LPs get transparency

The objective of the group is to streamline the private market’s historically fragmented approach to collecting and reporting ESG data in order to create a critical mass of meaningful, performance-based, comparable ESG data from private companies. This allows GPs and portfolio companies to benchmark their current position and generate progress toward ESG improvements, while enabling greater transparency and more comparable portfolio information for LPs. Importantly, this enables us to more effectively help portfolio companies improve their performance on material ESG issues.

100 LPs and GPs sign on to report on six KPIs for 1300 private companies

This project maintains the long-term objective to create a critical mass of meaningful, performance based ESG data from private companies, prioritizing near-term action. Impact thus far includes: