KEY ESG supports Invest Europe’s ESG Reporting Guidelines

Europe has become a breeding ground for sustainability disclosure frameworks. Regulations like the EU taxonomy, CSRD and SFDR in the EU and SDR in the UK as well as initiatives like the TCFD and the TNFD can be burdensome for private equity managers to report on. With this multitude of frameworks available, General Partners (GPs) are dealing with ever increasing and broadening reporting requirements to satisfy Limited Partners’ (LP) demands. The divergence of ESG regulations, frameworks and questionnaires worldwide doesn’t just affect ease of reporting but also the general understanding of what good looks like. This, in turn, creates difficulties in measuring sustainability performance and communicating that to LPs. As a result, investors can cherry pick metrics and there can be a disconnect between LP expectations and GP reporting. Therefore, any efforts to harmonise and unite the possible frameworks are welcomed by GPs and LPs alike.

Easing the burden of divergent frameworks

 
Invest Europe is the world’s largest association of private capital providers. It comprises a membership body of more than 650 member firms spanning the private markets from infrastructure, to private equity and private debt as well as LPs. It is growing year-on-year, continuing to expand the reach of its services such as industry-leading events, globally trusted research and expert regulatory advice.

Invest Europe has created guidelines that bring together different ESG reporting frameworks for private equity and venture capital investors. They provide a template that allows GPs to report to LPs combining several frameworks. Invest Europe went through a consultation process with its members and the survey results informed the creation of the guidelines. They incorporate ESG Data Convergence Initiative (EDCI) and World Economic Forum (WEF) metrics as well as SFDR Principle Adverse Impacts (PAIs), all of which are available on KEY ESG’s software.

Some of the metrics include renewable energy consumption (as included in SFDR and EDCI), board gender diversity (as included in SFDR and EDCI), exposure to controversial weapons (as included in SFDR) and total net new hires (as included in EDCI).

The template is designed for GPs to incorporate into their fund reports, portfolio company sections or in a separate ESG report and will be updated regularly to account for regulatory developments, by adding relevant metrics.

KEY ESG and Invest Europe‍

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KEY ESG is a member of Invest Europe and actively supports the development of this reporting template. As an organisation, we are eager to help reduce the pain points of every private equity fund manager in the process of ESG reporting. By incorporating this template into our software, we hope to allow GPs to successfully report to their LPs and capture as many data requests as possible. The implementation of Invest Europe’s template into our software is supplemented by our in-app metric manager. The metric manager allows users to automate metric calculations under various frameworks, including those outlined in Invest Europe’s template, helping to streamline processes and requiring minimal manual input. To find out more, book a personalised demo to see how our software solution can help you.