October 13, 2021 - by Tess Virmani. Despite the frustration felt by many investors over the availability, reliability and decision-usefulness of current ESG reporting, last week saw two important steps forward in improving the status quo in the private equity market. As previously reported, it was announced last week that Carlyle and CalPERS were leading a partnership of GPs and LPs – the ESG Data Convergence Project – to begin collecting and reporting certain ESG data. Two days later a second, different group of GPs and foundations heralded the fruit of their collaboration – Novata – a public benefit corporation and technology platform also aiming to improve ESG reporting across private markets.
Novata is backed by a consortium, which includes the Ford Foundation, S&P Global, Hamilton Lane and Omidyar Network, and is designed to offer a vetted ESG reporting framework built around 10 critical metrics that consistently appear across leading ESG methodologies. As reported by the WSJ, Novatra aims to be a central database for gathering, reporting and benchmarking companies’ performance on factors such as carbon emissions, resource management, employee diversity and workplace safety. The press release notes that beta customers will have access to the Novata technology platform before the end of the year with broader access planned to be available in early 2022.
While these alliances represent only initial steps to addressing ESG reporting fragmentation, they are certainly very welcome. The LSTA will continue to monitor developments in this space as it works to improve ESG reporting in the leveraged loan market.