IHS Markit, a specialist in critical information, analytics and solutions, has launched an environmental, social and governance (ESG) data collection and reporting solution for private equity (PE) firms, venture capital (VC) firms, their portfolio companies and investors.
The solution is part of iLEVEL, a sophisticated platform connecting participants in private capital markets.
A recent study by Private Equity International found that 85 per cent of limited partners (LPs) consider ESG factors during due diligence. However, there is no single standard for general partners (GPs) to follow and it can be difficult for LPs to collect the ESG data they need.
ESG reporting in iLEVEL covers 29 metrics shown to be relevant to investors seeking data from portfolio companies and PE or VC funds themselves. The metrics were developed through extensive research conducted by IHS Markit with general partners and limited partners. Flexibility in iLEVEL also permits GPs to customise the ESG metrics they want to collect based on their investor needs or portfolio companies’ characteristics.
“General partners and portfolio companies understand the value of ESG reporting, yet it has been a challenge to identify, collect and distribute relevant data,” says Melissa Ferraz, managing director at IHS Markit. “Integrating ESG metrics into iLEVEL’s digital framework helps GPs collect, aggregate and report portfolio data more quickly, making it easier for LPs to understand and evaluate ESG performance.”
Capturing CO2 footprint, diversity in employment, independence of board members and other ESG reporting metrics in iLEVEL helps GPs and LPs apply non-financial data to their value creation and risk management processes, two areas of interest for investors, according to IHS Markit research. Furthermore, facilitating ESG reporting can be viewed as a competitive advantage for GPs seeking to win mandates from investors interested in social or environmental benchmarks.
Adding ESG reporting is a natural expansion for iLEVEL, a cloud platform that streamlines data collection and dissemination in private equity, venture capital, real estate, infrastructure and private credit markets. iLEVEL provides GPs with an integrated system for portfolio monitoring, analytics, valuation and reporting and gives LPs a standardised mechanism with which to collect portfolio information from GPs.
