CalPERS, Carlyle lead global push on ESG reporting

(Reuters) -A group of global private equity firms and pensions funds managing over $4 trillion in assets said on Thursday they have agreed to standardize reporting on environmental, social and corporate governance (ESG) performance of portfolio companies.

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The group, led by Carlyle Group and the California Public Employees’ Retirement System (CalPERS), will track data on greenhouse gas emissions, renewable energy, board diversity and other metrics of companies in their portfolio.

The partnership comes at a time when companies, investors and regulators are increasingly asking for more sustainable and inclusive ways of conducting business amid a diversity push and concerns over climate change.

No universally acceptable way of producing ESG metrics exists, leaving investors scrambling to sort through different data from companies as well as disparate scores from ESG rating firms and an alphabet soup of acronyms representing different reporting standards.

“We have found it challenging to effectively measure impact in our private equity portfolio because of the multitude of frameworks and definitions used,” said Marcie Frost, chief executive officer of CalPERS, which is the largest U.S. public pension fund.

The investor group also includes Canada Pension Plan Investment Board (CPPIB), Blackstone Inc, Sweden’s EQT AB, Permira and CVC Capital Partners.

Under the initiative, private equity firms will gather and report ESG metrics from their portfolio companies, starting from this year. Boston Consulting Group, a consulting firm, will aggregate the data into an anonymized benchmark.

The founding group plans to meet on an annual basis to assess prior year’s data and build on initial metrics, the statement said.

“We were all marching in different directions to achieve similar aims,” Megan Starr, Carlyle’s global head of impact, said in an interview. “This is actually performance data from the companies themselves and it’s not fundamentally competitive with anything that’s in the market.”

The group said it will be open to any other private equity firm or investor wishing to join and contribute to its work.

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