How the ESG Data Convergence Initiative Standardises ESG Reporting in Private Markets

Lack of ESG Data in Private Markets

For most of the last decade, sustainability reporting in private markets suffered from a basic problem: the data was not comparable. Public companies faced disclosure rules, rating agencies, and shareholder pressure that, for all their flaws, produced information investors could line up side by side. Private companies faced none of that. Limited partners asked their general partners for ESG information, and each LP asked for it in a different format. GPs passed the requests to portfolio companies. Portfolio company finance teams filled out one-off spreadsheets that no one could reconcile across firms.

Private equity grew rapidly over the decade and became systemically important to the global economy, but it reported less ESG data than the public companies it often competed with. The causes were familiar: too many overlapping frameworks, limited clarity on what was material, and not enough capacity inside portfolio companies to collect comparable data.

During the pandemic, the California Public Employees' Retirement System and Carlyle gathered peers and proposed agreeing on a common set of ESG metrics the industry could actually use.

How the EDCI Was Established

The result was the ESG Data Convergence Initiative, launched in September 2021. The founding approach was deliberately narrow. Rather than create a new framework, the EDCI drew its metrics from the ones already in widest use, including GRI, SASB, TCFD, and the EU's SFDR. Members would report annually on a short, standardised list of sustainability indicators. Boston Consulting Group would validate submissions and aggregate them into an anonymised benchmark that members could use to compare their portfolios against peers.

About 100 firms joined in the first year, representing around 8.7 trillion dollars in assets under management. Membership has since grown to more than 500 GPs and LPs, collectively managing roughly 59 trillion dollars across private equity, infrastructure, and private credit. The 2024 benchmark drew on more than 150,000 data points from around 6,200 portfolio companies, making it the largest standardised sustainability dataset available for private markets. For context, that is more companies than sit in the S&P 1500 and the FTSE 350 combined, and each reports on the same defined metrics.

Megan Starr, who helped found the initiative during her time leading impact at Carlyle, described the scale at Axios House in 2025: "We just closed the books on 2024 data. We have 9,000 private companies reporting quantitative comparable ESG data tied with performance data across about 320 private equity firms, which gives us actual data about what is working, how it works and in what instance." Membership has kept growing in part because the marginal cost of joining falls with each firm that signs on.

The Core Metrics

The EDCI framework covers a deliberately short list of categories: greenhouse gas emissions, renewable energy use, board and C-suite diversity, work-related injuries, net new hires, and employee engagement. The metric set is reviewed annually and updated when members identify gaps. A net zero commitment metric was added for the 2024 reporting cycle. A cybersecurity metric was added for 2026, reflecting growing recognition that governance risk in private companies increasingly includes information security.

BCG's 2024 Sustainability in Private Equity report, drawn from EDCI data, found that among private companies using any renewables, the median rose from 28 percent to 30 percent of energy use in a single year. Public companies went from 29 to 32 percent over the same period, so private markets are closing the gap rather than falling further behind. The same report found that the median Scope 1 and Scope 2 emissions intensity at portfolio companies owned by GPs with public emissions commitments was more than 40 percent lower than at portfolio companies owned by GPs with no such commitment. This shows a measurable link between management commitments and operational outcomes.

Why Limited Partners Participate

For limited partners, particularly the large public pensions that originated the project, the motivation is risk management rather than signalling. Marcie Frost, CEO of CalPERS, has made this argument consistently. "When you break down ESG, it's around managing risks related to climate, managing risks related to poor human capital practices. It is about managing risks related to poor governance," she said at a CalPERS stakeholder forum. Anne Simpson, one of the project's architects at CalPERS, framed the rationale at launch as supporting "CalPERS' fiduciary duty to generate sustainable risk-adjusted returns to pay benefits."

The focus is on providing visibility into assets that LPs are responsible for but cannot see directly. BCG's 2024 survey of 231 EDCI members found that 90 percent of LPs cited transparency as a critical reason for collecting sustainability data, 85 percent said they expected to increase their prioritisation of sustainability over the next three years, and 70 percent said they believed companies that manage sustainability well would command a valuation premium.

In 2024, the EDCI launched a data-sharing pilot allowing LPs to request specific data directly from GPs through the platform. The pilot received 490 LP requests, 70 percent of which were approved, and 93 percent of approvals included real portfolio company names rather than anonymised entries. The feature has since moved into standard operation, and it is the clearest sign that the initiative has moved beyond benchmarking into the way capital is allocated.

The Commercial Framing

EDCI leaders increasingly describe sustainability in operational terms rather than values-based ones. Starr has been explicit about this shift. She stressed that sustainability decisions should identify specific impacts on EBITDA to help firms allocate investment, rather than being presented as uniformly beneficial. The goal, in her framing, is to specify where and how ESG factors affect performance so investment dollars can be prioritised accordingly.

The benchmark data supports that approach. EDCI data shows private companies held by their PE owners for two or more years tripling their use of renewable energy on average, from 6 percent of the energy mix to 18 percent. More than half of portfolio companies tracked over time have maintained or increased the share of women on their boards. These figures represent incremental improvements that accumulate across portfolios and, over multiple reporting cycles, across the industry.

Limitations and Open Questions

The initiative has drawn substantive criticism. Some ESG heads at PE firms have argued that standardisation risks pulling attention away from materiality, encouraging firms to report on what is comparable rather than what matters most at each company. Others note that the EDCI's climate metrics do not go far enough for LPs already committed to Net Zero Asset Managers or the Principles for Responsible Investment, who require physical and transitional risk data the EDCI does not currently collect. North American GPs are slower to engage than their European peers, with only 16 percent of GPs in the Americas making public emissions or diversity commitments compared with 45 percent in Europe, the Middle East, and Africa.

The EDCI's roadmap addresses some of these gaps. The initiative expanded to cover infrastructure funds in 2024 and opened to private credit firms in 2025. The Steering Committee has announced that a membership fee structure will begin in 2026, scaled by AUM and designed for cost recovery rather than profit, to give the initiative financial independence as BCG moves from pro bono to a revised low-cost support model.

Where the EDCI Stands

Collecting standardised, performance-linked data provides a more stable foundation for private markets sustainability work than the fragmented reporting that preceded it. The initiative has not set new climate targets or rewritten disclosure rules. It has created a shared set of ESG metrics for private markets, aggregated the resulting data at industry scale, and made that data available for benchmarking and direct LP use. With 500+ members, 6,200 portfolio companies, and a growing body of multi-year time-series data, the EDCI has moved from an industry working group into a functioning piece of private markets infrastructure.