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A Simplified Guide for ESG Data Convergence Initiative (EDCI) Reporting
Blog
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February 8, 2024
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6
min read
Align with ESG best practices with the ESG Data Convergence Initiative (EDCI) for private industry.
The ESG Data Convergence Initiative (EDCI) is a newcomer on the scene, but quickly gaining prominence. Founded in 2021, its goal is to provide a simple, comprehensive, and flexible framework for generating action-oriented and performance-based ESG data across the private equity industry to unify and streamline ESG reporting. Read on for an executive summary on how to report into EDCI at your organization.
Overview of EDCI
EDCI is an open partnership administrated by Boston Consulting Group (BCG) that brings together private equity stakeholders who are committed to collecting and reporting on ESG data in a clear and meaningful manner.
Membership is open to:
- GPs and LPs in the private equity industry
- Investment managers with asset allocation responsibilities
- Private credit firms
- Investment consultants who advise EDCI members
- Data platforms who work with private equity GPs and LPs
Each member of EDCI commits to report on a core set of metrics drawn from existing frameworks in the ESG space, such as the ISO, the ILO, SASB Standards, GHG Protocol, and GRI. The categories that these metrics fall into are:
- Greenhouse Gas (GHG) Emissions
- Net Zero
- Renewable Energy
- Diversity
- Work-Related Incidents
- Net New Hires
- Employee Engagement
GP’s track metrics in these categories on behalf of their portfolio companies and report them annually following EDCI’s standard format. The data is then aggregated, anonymized, and shared with GPs, relevant portfolio companies, and invested LPs for benchmarking.
As of 2024, EDCI counts among its membership over 375 GPs and LPs representing over 4,300 portfolio companies and $28 trillion in assets under management. All active EDCI members are listed on the bottom of the EDCI homepage, including Carlyle, Bain Capital, APG, the California Public Employees’ Retirement System (CalPERS), and others.
While EDCI members have access to a plethora of data and benchmarks, some information is also made public to the general audience. In 2023, the EDCI released its first report on industry trends and patterns. Its broad takeaway was that private equity plays a pivotal role in the climate battle and is making gains in renewable energy use, but still has plenty of room for improvement across all metrics.
Benefits
Private equity firms stand to benefit from joining the EDCI for six primary reasons. By taking part in EDCI, they can:
- Achieve streamlined reporting, saving time and resources for both GPs and portfolio companies
- Attain clarity on their ESG performance and that of their portfolio companies relative to one another and industry benchmarks
- Manage and streamline the sharing of ESG data requests and share data directly from the EDCI platform
- Make informed investment decisions backed by data when it comes to future investments
- Attract institutional investors for future funding and uncover the relationship between ESG efforts and financial performance.
- Market their ESG commitments and successes across their portfolio to their stakeholders
All EDCI members get access to an EDCI Benchmark Summary dashboard, a metrics summary dashboards, and a dashboard of trends. The data from these dashboards is derived from aggregated and anonymized data from all other EDCI members, presenting a comprehensive picture of benchmark performance in the private equity industry.
You can check out a demo portal on the EDCI website to understand the type of data that would be made available to you as a participating EDCI member.
Join EDCI
To join EDCI, you can simply fill out their online survey. You will be asked to share information about yourself and your organization, and sign a data privacy agreement. The EDCI team will then follow up with you directly on next steps with regards to reporting on EDCI metrics.
EDCI shares its reporting templates publicly online as a resource for members and non-members alike:
You may find the EDCI Metrics Guidance document above especially useful, as it contains thorough details on the variables you are expected to report on as well as a thorough FAQ section.
GPs are requested to report on data annually by April 30th of each year; LPs are not responsible for reporting on data. Data can be submitted directly through a participating platform like Green Project, on BCG’s secure data submission portal, or via a file transfer system using the EDCI data submission template above.
Green Project is proud to be an integrated data solutions provider for EDCI and bring forward an end-to-end solution for reporting needs. From fund configuration and portfolio onboarding to data collection and audit-ready carbon accounting, Green Project empowers private equity firms to control their carbon accounting and EDCI reporting in one place. Green Project assigns a dedicated Sustainability Manager to work with each portfolio company and ensure everything goes smoothly for each reporting deadline.
EDCI Categories and Metrics
EDCI recommends that you report on all of the following categories and metrics on an annual basis. That being said, many items are optional and an incomplete report is better than no report. The EDCI encourages all members to do their best to gather as much information as possible from their portfolio companies to receive a thorough picture of their ESG performance.
The categories and metrics above were informed by the following criteria:
- Globally accepted: selected from widely accepted frameworks including GRI/WEF, SASB, TCFD, and EU SFDR
- Meaningful: meaningful from a financial or societal impact perspective
- Comparable: comparable across portfolio companies and GPs
- Dynamic: able to be evolved as tracking and understanding improves over time
- Straightforward: simple to track accurately, with limited mandatory metrics to support accessibility
- Actionable: tied to specific actions that are under GP and portfolio company’ control
- Objective: as objective as possible with minimal need for interpretation
The EDCI Steering Committee reviews metrics every year to consider additions, modifications, and improvements towards EDCI’s long-term vision. Since its foundation in 2021, the EDCI has added “number of women in the C-suite” and “Net Zero” to its list of metrics.
Work With Green Project
Green Project helps with each step in the EDCI process, from data collection and quality checks to reporting and next steps.
Want to learn more? Watch Green Project’s webinar with Palladium Equity Partners from January 2024 where we discuss how to prepare for the EDCI. The panel focuses on best practices for data collection, how EDCI data can attract and retain LPs, and how technology can support reporting goals.
Green Project can support your ESG reporting and goals for not only EDCI but CDP, SFDR, GHG Protocol, PRI, CSRD, and other reporting frameworks.
Green Project’s carbon accounting software specializes in automating your report-writing process, and putting together audit-ready reports so you can spend less time measuring emissions, and more time reducing them.