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Context and performance key for ESG data in private markets

ESG continues to sit at the top of the agenda for private market investors and managers. The challenge of putting this data into context is becoming critical for industry participants in order to understand how they compare to their peers and to meet emerging investor and regulator expectations. Linking these metrics to financial performance is also crucial to optimize growth. 

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ESG continues to sit at the top of the agenda for private market investors and managers. The challenge of putting this data into context is becoming critical for industry participants in order to understand how they compare to their peers and to meet emerging investor and regulator expectations. Linking these metrics to financial performance is also crucial to optimize growth. 

“Context is the missing link for ESG data. GPs and private companies need to be able to contextualize their ESG data to understand where they stand compared to industry peers and averages,” says Alex Friedman, CEO, Novata. “The ability to accurately benchmark data on an anonymized basis will enable them to identify key areas of opportunity to create financial value and move closer to meeting sustainability targets.”

Further, ESG data can help managers in private markets to build a positive connection to performance. Linking ESG metrics and data to specific financial outcomes and identifying and tracking the metrics that matter to valuation will be crucial as GPs incorporate ESG considerations in investment decisions. 

“Novata recently partnered with S&P’s iLevel platform to facilitate this by providing GPs with a simple way to view ESG and financial data in one platform, in an integrated manner,” notes Friedman.

Put another way, better measurement and management of ESG performance is central to creating a more sustainable and inclusive form of capitalism – you can’t manage or improve what you aren’t currently measuring. 

Investing in a technology solution to enable ESG data collection and monitoring will provide GPs with additional efficiency and transparency. Friedman observes that many GPs already on the ESG journey have historically been using multiple Excel spreadsheets to manage large volumes of data manually: “This is difficult logistically and makes it challenging to meet the expectations of LPs and regulators. LPs are no longer satisfied by words or commitments; they are looking for GPs to demonstrate ESG performance through data and are interested in intuitive solutions, like Novata, that can provide it.”

Ultimately, clarity around ESG data and consistent reporting leads to better year-over-year analysis and provides needed insights to inform actions that can improve financial performance.

According to Friedman, 2022 represented an inflection point for private markets and ESG: “Private companies, owners, and investors are increasingly viewing ESG as a value-creation catalyst and recognizing the impact of critical non-financial metrics on company performance and financial value.”

Further, regulatory changes, with Europe’s SFDR playing a central, galvanizing role, have had a ripple effect on the industry. SFDR mandates are pushing private companies to start tracking and reporting on material ESG metrics, such as greenhouse gas emissions. 

“As the industry continues to evolve, Novata is serving the changing needs of private equity firms and their portfolio companies,” Friedman highlights. “We are focused on providing an intuitive, turn-key set of solutions for ESG data collection, analytics, and reporting.”

Novata’s mission is to empower private markets to achieve a more sustainable and inclusive form of capitalism. The firm believes that ESG is not only good business – it’s the right thing to do.


Alex Friedman CEO and co-founder at Novata – Prior to Novata, Alex held roles including chief financial officer of the Bill & Melinda Gates Foundation, where he created its social impact fund, global chief investment officer of UBS, and chief executive officer of GAM Holding, a publicly listed alternatives asset manager. Friedman co-founded Jackson Hole Economics and is a board member of Franklin Templeton. He is based in New York. 

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