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Argentum becomes part of the ESG Data Convergence Initiative
In 2021, some of the world’s leading private equity players initiated a project aiming to standardise ESG reporting in the industry. Argentum is part of this initiative.
The project establishes a fixed set of ESG indicators for general partners (GP) and limited partners (LP) in private equity funds. It will ease the burden of reporting for the managers and give investors more insight into the companies in the portfolio. At the last update, 180 industry players with 21 trillion dollars in assets under management were involved in the project.
The first reporting was carried out in 2022. For now, there is an agreement to report on 15 indicators within six main areas: Renewable energy use, emissions data, board diversity, net new hires, work-related injuries and employee engagement.
As an LP, Argentum follows up with all the fund managers where the company has committed capital. In this year’s reporting, we have sent out the ESG Data Convergence Initiative data sheet to the managers and encouraged them to report their data. The response has been promising, and the project has given Argentum better insight into several ESG KPIs in the portfolio. As this is a new initiative, it will take some time before you can get data over more extended periods and compare the data over time.
The work to develop relevant ESG KPIs that the portfolio companies must report on has long been a focus area in the PE industry. The challenge has been to determine which indicators should be used and how they should be reported in a good and comparable way. Since investors and managers may have different views on this topic, it can lead to unnecessary duplication of work and unclear indicators. An industry initiative such as the EDCI can become the central contributor to strengthening reporting in our industry.
Enjoy reading this year’s report!