Private market data tools have become a fixture of the data management industry, as evidenced by year-ahead predictions from experts who routinely put it near the top of their lists of anticipated developments in 2025.
A slew of new products have also been launched to cater to the growing demand for information from general partners (GPs), who manage private market funds. Their investors, limited partners (LPs) – which include some of the world’s largest financial institutions – want the sort of visibility into portfolio companies that they can expect of publicly traded firms.
There are many difficulties mitigating against that, however, particularly concerning data quality and availability. One of the most fundamental issues is a lack of understanding among portfolio companies and GPs about what data LPs want, with ESG data being chief among them.
Enter the ESG Data Convergence Initiative (EDCI), which was created during the Covid period by the Californian pension fund CalPERS and the Carlyle Group. They gathered a small group of LPs and GPs to work out how they could solve for the growing need for – and unavailability of – private market ESG data.
Basic Metrics
In 2021 the EDCI was formally convened with seven GPs and nine LPs that accounted for US$4 trillion under management. Soon after, they enlisted the help of Boston Consulting Group (BCG) and together established a set of core metrics that LPs would need from GPs’ portfolio companies.
That list of datasets has developed into a template and a set of guidelines that have evolved over the years and now form the basis of a reporting framework for the EDCI’s membership, which now totals more than 6,000 portfolio companies and 475-plus LPs and GPs that manage more than $38 trillion.
In the process, the EDCI has created a growing trove of private-market data that is bringing a new level of transparency into the sustainability credentials of funds via their portfolio-company constituents.
“It’s been game changing in terms of GPs being able to collect data from their portfolio companies and share that data in a consistent format with their limited partners,” explains BCG partner Ben Morley, who leads the company’s support of the EDCI.
“And if you’re a limited partner, you’ve gone from having no data from your privates to really meaningful coverage from your privates on these core data points,” Morley tells Data Management Insight.
Opaque Markets
The list of metrics that the organisation has laid out for collection is not exhaustive, reflecting the early stages of ESG data collection among private market participants. Among them are data on carbon emissions, renewable energy usage, in-work injuries, leadership-team diversity and hiring policies. All are formulated from established sustainability reporting standards, including the greenhouse gas protocol and the Occupational Safety and Health Administration.
If they appear very basic compared with the sorts of datasets that regulators are demanding from public companies that’s because they are. Until very recently, private markets had not been expected to disclose data in any granularity on account of there being few regulations requiring them to do so. The relatively small size of those markets also meant companies felt little need to report their ESG performance.
Today, as public markets shrink and financial uncertainty stokes capital market volatility, large investors are turning to the higher returns of private and alternative investments.
Bloomberg data shows that investments into alternative markets accounted for about a fifth of global assets under management in 2022 and half of all revenues generated globally. That is predicted to grow 20 per cent annually, with separate data indicating that a third of all institutional capital is allocated to privates.
“It’s the first time that a lot of these private equity funds have been able to actually have data-driven insights around how they’re doing on some of these topics, rather than just use proxies to public companies or a case study here or there, ****and they can think strategically about where they might want to invest going forward,” says Morley.
Data Window
It’s not just ESG data that has been difficult to unlock from the head offices of portfolio companies. The absence until recent years of any impetus to disclose data means that the information they hold is often tied up in reports, spreadsheets, meeting notes and other hard-to-reach information sources.
With its annually updated list of core metrics, the EDCI is helping to encourage the communication of broader datasets from funds.
“This has been a powerful tailwind,” says Morley. “LPs are getting more sophisticated in the data they’re requesting from GPs and we’re definitely going through a maturation of that sector.
“Out there are service providers that are helping GPs collect data and improve the quality of that data. GPs are getting better at using consistent definitions, tracking things over time, and so on, and then there are rapidly growing entities that are helping with the transmission of data between GPs and LPs. I see that continuing.”
Data Hygiene
EDCI’s treatment of data is increasing in sophistication too. BCG has established an “involved” data review process in which its experts validate the gathered information, calling on disclosing companies to explain outliers, and then aggregating it for presentation in an online dashboard. From that, BCG creates benchmarks of industry performance, creating what Morley says is a first-of-its-kind set of ESG gauges for private companies.
“I have a team of BCG Expand statisticians that are working with me on this,” Morley says. “For every GP that submits data – and we had over 250 of them submit data in 2024 – we review their data submission and go back to them if there are anomalies or outliers and work with them to ensure the data submission is as high quality as possible.”
The service is proving beneficial to institutions. The open-source data is accessible by any private market participant, providing them with information that can be integrated with their wider datasets to help portfolio managers set investment strategies.
“There was such a knotty problem that no single organisation could solve alone, but by coming together as an industry, it’s been really great to see the way this has unlocked such opportunities for sustainable value creation,” says Morley.
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