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Laxman Pai, Opalesque Asia: The majority of private equity firm's portfolio companies are unsure about how to report their ESG metrics to investors as general partners experience significant data collection delays.
According to a survey of 100 general partners and portfolio companies in Europe, the U.K., and the U.S. released by KEY ESG, while 75% were required to report ESG data to limited partners, 90% of them were unsure of how to do to so.
The study found that with many firms taking up to 12 weeks to collect ESG data, missing reporting deadlines, stalling or failing deals at the point of sale are at risk. 80% of GP respondents noted that the extensive ESG questions they receive from their LPs take considerable time to respond to and can use up resources that could be driving ESG improvement at the portfolio company level.
However, 70% of the same respondents think there is real merit in getting to a common understanding of which ESG data really matters, so that they can spend more time improving ESG performance and go 'deeper' on a narrower set of material ESG metrics to improve quality of assessment, as opposed to simply reporting on a wide range.
Meanwhile, 80% of fund managers noted challenges around extensive ESG questionnaires, with 70% preferring to report on material factors, said the survey.
Regulatory changes and geographic differences are also creating issues in data collection and analysis even amongst established ESG practitioners. 20% o...................... To view our full article Click here
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