Ahead of our US ESG Summit in New York on 24 October, Kim Erle, Global Head of ESG at H.I.G. Capital and a speaker at the event, chats to Private Equity Wire about where we are on building more ESG data transparency, and alignment between LP and GP considerations.
How far have we come on the journey to tackling ESG data opacity? Where are the biggest gaps that persist in data collection?
Over the past few years, we’ve seen a significant transformation in ESG data. Industrywide efforts, coupled with regulatory momentum, have driven the standardization of key metrics, particularly in climate-related areas. With a growing consensus on the “why” and the “what” of ESG data, we are now poised to prioritize the “how”—specifically, enhancing data quality to deliver rich, decision-useful insights. This current and expected progress in the quality and comparability of ESG data will significantly improve our ability to integrate financially material ESG considerations into financial decision making and will help us to substantiate outcomes.
However, challenges remain. Transparency, while essential, should not become the goal. Instead, our focus should remain on a finite set of financially material metrics that both support enhanced decision making and meet the diverse needs of stakeholders. In the near-term, this approach will allow us to tackle obstacles to high-quality ESG data, such as technological gaps and general data governance challenges. This is especially important as the ESG landscape continues to evolve, with increasing emphasis on biodiversity, human rights, and supply chain management, and challenges us to define and manage new forms of data.
You spoke on last year’s panel about the future of ESG; are we closer to a future where ESG reporting becomes fully integrated with traditional financial reporting?
Fully integrated ESG and financial reporting is certainly emerging on the horizon. Recent regulatory developments, particularly in Europe with the Corporate Sustainability Reporting Directive, are setting new standards for consistency in sustainability reporting. CSRD is driving companies to implement more rigorous, auditable sustainability reporting practices, marking a critical step toward true integration. While this journey is ongoing and some regulatory efforts, like the SEC’s climate rule, have faced resistance, the broader trend is unmistakable: the market is recognizing that material ESG factors are central to assessing company performance.
Are LP and GP expectations around ESG reporting growing more closely aligned?
We are seeing greater alignment in ESG expectations between LPs and GPs, driven by the growing adoption of standardized frameworks and KPIs that enable more consistent and meaningful reporting. The maturation of the ESG landscape has also established a common language and set of objectives for discussing responsible investment practices. From our perspective, this evolution is both necessary and advantageous – but only works if the industry aligns around a limited core set of material KPIs with common definitions. By aligning with our LPs, we’re not only addressing their diverse priorities but also strengthening our ability to manage risks and capitalize on opportunities.
Will you be drawing on some of the above themes during your panel at this year’s summit? What are you hoping to gain from the day?
Absolutely. Meeting the needs of diverse stakeholders begins with establishing a common language around ESG. In recent years, it has become clear that meaningful dialogue is impossible without robust data. This summit presents an opportunity to collaborate on that challenge and contribute to the next phase of ESG integration.
Kim Erle, Global Head of ESG, H.I.G. Capital – Kim is based in H.I.G.’s New York office and focuses on integrating environmental, social and governance best practices to drive measurable long-term value for H.I.G. and its investors. Kim has over 25 years of experience working in financial services and sustainability. Before joining H.I.G., Kim was a Managing Director and Head of Strategy and Impact at NY Green Bank, where her role included measurement, management and communication of the firm’s environmental and social impact. Prior to NY Green Bank, Kim was a portfolio manager of RREEF Retrofit Partners, a sustainable real estate fund at Deutsche Asset Management, and was a partner at Mitchell Madison Group, a global management consultancy. Kim earned a BS in Operations Research & Industrial Engineering from Cornell University, an MA in International Affairs and Economics from Johns Hopkins School of Advanced International Studies and an MBA in Finance from Columbia Business School, where she was valedictorian of her class. Kim has earned a Certificate in ESG Investing from the CFA Institute and serves on the Advisory Council of the Cornell Atkinson Center for Sustainability.
Want to learn more? Join us at the Private Equity Wire US ESG Summit on Thursday, 24 October at Convene, 101 Park Avenue, New York. Register for your complimentary pass here.
* Please note that registration for this summit is only open to senior executives at fund managers and investors. If you are a service provider and would like to attend, please get in touch with us on [email protected].