Author: ESGTree

In the evolving landscape of private equity, stakeholder calls for transparency and accountability have never been louder. As institutional investors, or limited partners (LPs), increasingly demand comprehensive reporting on environmental, social, and governance (ESG) factors, general partners (GPs) are under pressure to meet these expectations while staying ahead of industry trends. One area of focus is diversity, equity, and inclusion (DEI), a critical component of the broader ESG mandate that is gaining momentum within private markets.
The Institutional Limited Partners Association (ILPA), a leader in setting standards for the private equity industry, has introduced a Diversity in Action (DIA) framework that provides a clear pathway for GPs to address DEI, alongside its established ESG guidance. This framework helps GPs align with LP expectations while promoting a more inclusive and sustainable future. In this article, we explore how ILPA’s Diversity in Action initiative, coupled with best practices in DEI data collection and reporting, can drive meaningful change and enhance value for private equity firms.

The CSRD targets financial and non-financial companies covered by the Accounting Directive and the Transparency Directive, and falling into the following categories:

The United States Securities and Exchange Commission (SEC) is poised to release its highly anticipated climate-related disclosure rules for public US companies – a ruling that has been in the making for over a year.

Originally published in March 2022, the SEC proposed that all publicly listed US companies be mandated to report their climate data in alignment with reporting recommendations from the Taskforce on Climate-related Financial Disclosures (TCFD).
When the proposal was then opened for public comment, the SEC received over 3,400 letters, significantly more than it customarily does when seeking public input.

While the SEC ruling applies to public companies, given the current global regulatory environment, along with calls for greater scrutiny of ESG claims within the private equity industry, it is only a matter of time before similar climate considerations be asked of private funds. Moreover, although the proposal will almost certainly face some measure of legal challenges, this will likely not deter 98% of companies from implementing climate reporting, according to a PricewaterhouseCoopers survey of 300 senior executives at US public companies with at least $500 million in revenues

The United Kingdom now mandates TCFD-aligned reporting requirements for the private sector. The United States Securities and Exchange Commission has proposed requiring publicly traded US companies

On 26th June, 2023, the ISSB finally launched its inaugural sustainability standards, ushering in a new era in international corporate reporting.The International Sustainability Standards Board (ISSB) has issued its first two IFRS Sustainability Disclosure Standards: the IFRS S1, which provides a set of general disclosure requirements designed to enable companies to communicate to investors about the sustainability-related risks and opportunities they face over the short, medium and long term, and the IFRS S2 , which sets out specific climate-related disclosures and is designed to be used with IFRS S1. Both standards fully incorporate the 4 pillars of the Task Force on Climate-related Financial Disclosures (TCFD), namely Governance, Strategy, Risk Management, and Metrics and Targets.

Interestingly, the TCFD – which has been adopted into UK law and is used voluntarily by many of the world’s biggest asset managers – has now moved into the administration of the ISSB. This merger, as well as the ISSB’s subsumption of the Sustainability Accounting Standards Board (SASB), marks a significant advancement in the ISSB’s promise of bringing cohesion among the plethora of sustainability standards and frameworks available for asset managers.