ESG Data in Private Equity: Transitioning to a Digital ESG Platform

Zara de Belder

Associate Director

Lucy Tinson

Go to Market Digital

Contents

• ESG Data Management Platforms
• Selecting an ESG Reporting System
• How Anthesis Can Support You
• Contact Us

Share this article

• Share via Linkedin
• Share via Facebook
• Share via X
• Share via Email

For General Partners (GPs), establishing a robust environmental, social, and governance data management system as part of their portfolio engagement and data reporting process has become crucial to meeting regulatory compliance obligations, benchmarking portfolio progress, and driving sustainable growth.  

Mature digital platforms can also support GPs with their own reporting and disclosure requirements, including alignment to the ESG Data Convergence Initiative (EDCI), Principles for Responsible Investment (PRI), and Sustainable Finance Disclosures Regulation (SFDR), provide valuable data-driven insights to inform their portfolio improvement programmes, and assist in exit preparations. 

With more GPs considering a standardised approach to ESG data collection, we explore how private equity firms can leverage ESG data management tools to streamline data collection across their portfolio, unlock value creation opportunities, and support regulatory compliance. 

ESG Data Management Platforms: What are the Key Drivers and Opportunities?

Managing scattered sustainability data across a diverse portfolio can be overwhelming and time-consuming, especially with ever-evolving and demanding compliance needs. ESG data management platforms turn sprawling data into streamlined reports and dashboards, in the process, revealing insights to drive value creation. By automating ESG data gathering, validation, and reporting, portfolio managers can significantly improve efficiency, allowing them to focus on meaningful, data-driven discussions with portfolio companies about sustainability performance rather than being burdened by manual data collection challenges. 

ESG data management platforms offer the following opportunities: 

• Streamlined ESG data collection and reporting: Automating data gathering from portfolio companies, ensuring accuracy, consistency, and efficiency. 
• Regulatory and disclosure compliance: Simplifying adherence to ESG disclosure requirements (e.g., SFDR, SEC, EDCI, PRI, TCFD), reducing regulatory risks, and identifying broader company risks. 
• Portfolio oversight and performance tracking: Providing centralised dashboards to monitor ESG performance across all portfolio companies in real time. 
• Stakeholder engagement: Enhancing transparency and trust with LPs by providing clear, verifiable ESG reporting and impact metrics across diverse portfolios. 
• Value creation and competitive advantage: Helping identify ESG-driven value creation opportunities that enhance financial returns and long-term sustainability. 
• Exit readiness: Robust datasets can show how ESG activities and initiatives have created value through margin improvement and top-line and bottom-line growth. 

How to Select a Portfolio ESG Reporting System

An ESG portfolio reporting programme should be underpinned by robust ESG data governance and data management processes. By adopting secure, framework-aligned, and integrated ESG software, GPs are well positioned to monitor and benchmark ESG performance across their portfolio, regardless of sector or geography.

Here are our top tips when considering your portfolio data management process: 

1. Encourage Portfolio Companies to Leverage Existing Datasets

Organisations often possess valuable data, but the information is often fragmented and located in disparate systems across different business units. Integrating these data sets in a single platform can provide a holistic view of a portfolio company’s ESG vulnerabilities and strengths. 

2. Upskill and Educate GP ESG and Portfolio Management Teams

Developing in-house capacity is essential for General Partners. Educating ESG and deal teams on how to scrutinise and assess portfolio ESG data analytics will deepen understanding of the value of strong portfolio ESG data and the steps required, post-acquisition, to implement sustainable practices to drive improvement.

The delivery of a portfolio-wide training programme will also educate portfolio management teams on the importance of regular and robust ESG data reporting, while guiding how to integrate a GP’s ESG data management platform within their own internal processes and systems. 

3. Understand What Criteria Will Best Support Your Portfolio Reporting Needs

• Integration with Existing Portfolio Data Collection Processes: Your selected platform should collect and integrate each portfolio company’s data in a simple, systematic, structured way configured to your disclosure needs and responsible investment strategy. Moving away from spreadsheets and into a digital solution opens opportunities for GPs by creating efficiency and accuracy in the data collection process and visualising data in a standardised way to gain actionable insights. Advanced platforms are SaaS based and support API integrations, enabling seamless data transfer and ease of transition. This connectivity simplifies the tracking of ESG metrics across departments, making the entire data pipeline cohesive and manageable.
• Regulatory and Industry Reporting Requirements: Critically assess which frameworks you need to support with your broader stakeholder disclosure requirements and portfolio performance analytics. ESG data platforms which align to frameworks such as the EDCI, PRI and SFDR can streamline a GP’s external reporting requirements, establish consistency within portfolio data requests and support portfolio benchmarking and baselining. Some regulatory requirements, such as CSRD, also require complex audit requirements, so investing in a digital platform that can provide audit trails is a useful reporting function. 
• Protecting Sensitive Portfolio Data: Cybersecurity and digital resilience are of paramount importance to GPs and their portfolio companies throughout the investment lifecycle. Safeguarding sensitive ESG information and ensuring compliance with privacy regulations means that any digital platform should incorporate robust security measures to protect data integrity and prevent unauthorised access, such as multi-level encryption. Regular ethical hacking and an incident management process are indicators of best practice. As a minimum, identify a platform with an information security management certificate, such as ISO 27001, and SOC Type 2 certification to ensure the safeguarding of data.
• Value Creation Through Data Visualisation: Effective ESG data management goes beyond just collecting information – it’s about turning portfolio data into actionable insights for portfolio management, deal teams and prospective buyers. A well-designed ESG data management solution should include dashboards tailored to the unique needs of a GP, offering customised views that align with investment strategies and reporting frameworks. Whether it’s portfolio benchmarking, bespoke scoring systems, framework-specific dashboards, or tracking data collection progress, a flexible digital solution ensures that ESG insights are not only accessible but also drive meaningful decision-making.

How Can Anthesis Help? 

For private equity firms seeking comprehensive ESG data management solutions, Anthesis is equipped to support. We combine insights from our award-winning global team of private capital consultants with our comprehensive ESG data management platform, MERO, to offer GPs and their portfolio companies an effective ESG data collection and management platform.