This article is based on insights from KEY ESG's workshop in June 2025 featuring ESG professionals from leading private equity firms across Europe and the United States. The discussion covered current challenges, emerging solutions, and future priorities in ESG data management.
The private equity industry is experiencing a seismic shift in how it approaches Environmental, Social, and Governance (ESG) data management. A recent virtual workshop brought together ESG professionals from leading European and American private equity firms to discuss the evolving landscape of sustainability reporting and the technological solutions driving efficiency in this space.
The growing complexity of ESG reporting
Private equity firms are navigating an increasingly complex web of regulatory requirements and stakeholder expectations. From SFDR (Sustainable Finance Disclosure Regulation) to CSRD (Corporate Sustainability Reporting Directive), the regulatory landscape continues to evolve, with new frameworks like Invest Europe and VSME (Voluntary Simplified Sustainability Reporting for SMEs) on the horizon.
"We're seeing a never-ending desire to have frameworks that are unique," noted one workshop participant, highlighting the challenge of managing multiple reporting standards simultaneously. This complexity is driving the need for more sophisticated technology solutions that can adapt to changing requirements while maintaining data integrity.
Key pain points in current ESG workflows
The workshop revealed several critical challenges that private equity professionals face in their day-to-day ESG operations:
Data accuracy and validation
One of the most pressing concerns is ensuring data accuracy across portfolio companies. As one participant explained, "LPs are starting to do quality checks themselves and coming back to us saying 'Year on year, there's been too much movement here' and asking us to explain why."
This trend toward increased scrutiny from Limited Partners is driving demand for automated data validation and outlier detection systems that can flag inconsistencies before they reach stakeholders.
Change management and audit trails
Multiple participants highlighted the difficulty of tracking who made changes to data submissions, particularly when multiple team members from portfolio companies have access to reporting platforms. "Sometimes people are overriding answers, and we're not knowing which one is the correct answer," shared one participant.
Resource allocation and review processes
The manual nature of current data review processes is consuming significant resources. Fund managers are seeking ways to streamline these workflows, particularly as they scale their ESG programs across larger portfolios.
Emerging solutions and innovations
The workshop highlighted several technological innovations that are reshaping ESG data management:
Custom calculated metrics
Advanced platforms are now offering Excel-like functionality that allows users to create custom metrics tailored to their specific reporting needs. This capability is particularly valuable for portfolio companies with unique business models that don't fit standard industry metrics.
Third-party viewer roles
New functionality allowing internal and external third-party consultants and auditors to access data without editing permissions is streamlining assurance processes. As one participant noted, this "will save time in assurance processes and validation and verification processes."
Platform data validation
Real-time validation capabilities are being integrated to flag data inconsistencies as they occur, rather than discovering them during review processes. This proactive approach is helping firms maintain higher data quality standards.
The value creation imperative
A particularly insightful discussion emerged around connecting ESG data to value creation. A US-based participant emphasized,
"The path forward is you have to be able to map ESG to value creation. If you can seamlessly integrate into those dashboards, I think you have a better chance of having the ESG detractors come on board and see the value in the data."
This perspective highlights a critical shift in how ESG is being positioned within private equity firms - moving from compliance-driven reporting to strategic value creation tool.
Industry collaboration and knowledge sharing
The workshop demonstrated the value of peer-to-peer learning in the ESG space. Participants frequently referenced wanting to understand "how do other GPs go about this?" This collaborative spirit is driving the development of industry forums and knowledge-sharing platforms.
Today’s technology priorities
When asked to prioritize technology features which deliver most business value, workshop participants ranked the following areas as most critical:
- Automated data outlier flagging - The clear winner, with participants emphasizing the need to identify data anomalies quickly and efficiently
- Data review and sign-off workflows - Streamlining approval processes while maintaining control and accuracy
- Visual insights and dashboards - Making data more accessible and compelling for stakeholders
- In-platform change logs - Providing transparency into who made what changes and when
The benchmarking opportunity
An emerging theme was the desire for industry benchmarking capabilities. "People always want benchmarks. It provides a proof point," observed one participant. However, the challenge lies in creating meaningful comparisons given the diversity of portfolio companies and business models within private equity.
Conclusion
The private equity industry's approach to ESG data management is rapidly maturing. While regulatory compliance remains a driver, the focus is shifting toward strategic value creation and operational efficiency. Technology solutions are evolving to meet these needs, with an emphasis on automation, transparency, and user-friendly interfaces.
As one workshop participant succinctly put it:
“I'm trying to move to the next step where it's not just reporting, it's not just data points, but it's actually strategic, value-creating."
This sentiment captures the trajectory of the entire industry - moving beyond compliance to leverage ESG data as a true competitive advantage.
The firms that successfully navigate this transition will be those that invest in robust technology platforms, foster collaborative knowledge sharing, and maintain a clear focus on connecting ESG performance to business value creation.
This article is based on insights from KEY ESG's workshop in June 2025 featuring ESG professionals from leading private equity firms across Europe and the United States. The discussion covered current challenges, emerging solutions, and future priorities in ESG data management.
The private equity industry is experiencing a seismic shift in how it approaches Environmental, Social, and Governance (ESG) data management. A recent virtual workshop brought together ESG professionals from leading European and American private equity firms to discuss the evolving landscape of sustainability reporting and the technological solutions driving efficiency in this space.
The growing complexity of ESG reporting
Private equity firms are navigating an increasingly complex web of regulatory requirements and stakeholder expectations. From SFDR (Sustainable Finance Disclosure Regulation) to CSRD (Corporate Sustainability Reporting Directive), the regulatory landscape continues to evolve, with new frameworks like Invest Europe and VSME (Voluntary Simplified Sustainability Reporting for SMEs) on the horizon.
"We're seeing a never-ending desire to have frameworks that are unique," noted one workshop participant, highlighting the challenge of managing multiple reporting standards simultaneously. This complexity is driving the need for more sophisticated technology solutions that can adapt to changing requirements while maintaining data integrity.
Key pain points in current ESG workflows
The workshop revealed several critical challenges that private equity professionals face in their day-to-day ESG operations:
Data accuracy and validation
One of the most pressing concerns is ensuring data accuracy across portfolio companies. As one participant explained, "LPs are starting to do quality checks themselves and coming back to us saying 'Year on year, there's been too much movement here' and asking us to explain why."
This trend toward increased scrutiny from Limited Partners is driving demand for automated data validation and outlier detection systems that can flag inconsistencies before they reach stakeholders.
Change management and audit trails
Multiple participants highlighted the difficulty of tracking who made changes to data submissions, particularly when multiple team members from portfolio companies have access to reporting platforms. "Sometimes people are overriding answers, and we're not knowing which one is the correct answer," shared one participant.
Resource allocation and review processes
The manual nature of current data review processes is consuming significant resources. Fund managers are seeking ways to streamline these workflows, particularly as they scale their ESG programs across larger portfolios.
Emerging solutions and innovations
The workshop highlighted several technological innovations that are reshaping ESG data management:
Custom calculated metrics
Advanced platforms are now offering Excel-like functionality that allows users to create custom metrics tailored to their specific reporting needs. This capability is particularly valuable for portfolio companies with unique business models that don't fit standard industry metrics.
Third-party viewer roles
New functionality allowing internal and external third-party consultants and auditors to access data without editing permissions is streamlining assurance processes. As one participant noted, this "will save time in assurance processes and validation and verification processes."
Platform data validation
Real-time validation capabilities are being integrated to flag data inconsistencies as they occur, rather than discovering them during review processes. This proactive approach is helping firms maintain higher data quality standards.
The value creation imperative
A particularly insightful discussion emerged around connecting ESG data to value creation. A US-based participant emphasized,
"The path forward is you have to be able to map ESG to value creation. If you can seamlessly integrate into those dashboards, I think you have a better chance of having the ESG detractors come on board and see the value in the data."
This perspective highlights a critical shift in how ESG is being positioned within private equity firms - moving from compliance-driven reporting to strategic value creation tool.
Industry collaboration and knowledge sharing
The workshop demonstrated the value of peer-to-peer learning in the ESG space. Participants frequently referenced wanting to understand "how do other GPs go about this?" This collaborative spirit is driving the development of industry forums and knowledge-sharing platforms.
Today’s technology priorities
When asked to prioritize technology features which deliver most business value, workshop participants ranked the following areas as most critical:
- Automated data outlier flagging - The clear winner, with participants emphasizing the need to identify data anomalies quickly and efficiently
- Data review and sign-off workflows - Streamlining approval processes while maintaining control and accuracy
- Visual insights and dashboards - Making data more accessible and compelling for stakeholders
- In-platform change logs - Providing transparency into who made what changes and when
The benchmarking opportunity
An emerging theme was the desire for industry benchmarking capabilities. "People always want benchmarks. It provides a proof point," observed one participant. However, the challenge lies in creating meaningful comparisons given the diversity of portfolio companies and business models within private equity.
Conclusion
The private equity industry's approach to ESG data management is rapidly maturing. While regulatory compliance remains a driver, the focus is shifting toward strategic value creation and operational efficiency. Technology solutions are evolving to meet these needs, with an emphasis on automation, transparency, and user-friendly interfaces.
As one workshop participant succinctly put it:
“I'm trying to move to the next step where it's not just reporting, it's not just data points, but it's actually strategic, value-creating."
This sentiment captures the trajectory of the entire industry - moving beyond compliance to leverage ESG data as a true competitive advantage.
The firms that successfully navigate this transition will be those that invest in robust technology platforms, foster collaborative knowledge sharing, and maintain a clear focus on connecting ESG performance to business value creation.
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