Invest Europe, the association representing Europe’s
private equity, venture capital, and infrastructure sectors, as well as
their investors, will develop a coherent standard for how private equity
and venture capital firms should report on environmental, social and
governance (ESG) issues - bringing harmonisation and transparency to
essential ESG reporting for investors and regulators.
In 2021, a wide range of new ESG-related regulatory reporting
requirements were set globally, regionally and nationally, including the
EU’s Sustainable Finance Disclosure Regulation. In parallel, a range of
privately-led initiatives - both commercially and non-commercially
driven - were developed. Some of these respond to regulatory standards,
while others are tailored to meet the demands of institutional
investors.
Eric de Montgolfier, CEO, Invest Europe, said:
- “The proliferation of ESG reporting requirements places a heavy
burden on European private equity managers, many of which are spending
too much time on developing templates and reporting, rather than
focusing on delivering tangible ESG results across their firms and
within portfolio companies.
- “By creating a standard for ESG reporting, Invest Europe will
provide transparency, clarity and harmony to this space - benefiting
firms, their investors and stakeholders more broadly.”
The move to develop a reporting standard for the European private
equity and venture capital industry reflects Invest Europe’s strategy to
position itself as a leader on ESG, and to showcase the benefits that
the industry continues to contribute to society and the environment.
In November 2021, Invest Europe published its Climate Ambition, in
which it committed to actively support the 2050 goals set out in the
Paris Climate Accords. One of the workstreams needed to fulfill that
ambition is building and maintaining tools for members and the industry
to comply with the rules, and to develop standards that will help the
industry move towards net zero.
In parallel, the European Data Cooperative
(EDC) will also begin collecting ESG data from the European private
equity industry on key performance indicators, including actions related
to climate change, female representation in private equity backed
companies, and bribery and corruption policies. The EDC is a
market-leading database established in partnership with national private
equity associations across Europe by Invest Europe. The EDC gathers
fundraising, investment, divestment and economic impact data on more
than 1,600 European private equity and venture capital firms and their
portfolio companies, accounting for 90% of the €754 billion in capital
under management in Europe. More information on the ESG data tracking –
which will be updated annually - will follow.
Invest Europe’s reporting standard will be developed with the
participation of members, representing both LPs and GPs active in
Europe, and across the range of private equity segments from local
venture capital funds to global buyout groups.