Best Practices in ESG Reporting Overcome Regulatory and Other Challenges

For private debt fund managers, reporting on ESG performance has become an increasingly important and difficult task, especially as investors and regulators call for more transparency. It’s not always easy to get at the required data, and it doesn’t help that reporting requirements often differ country-to-country.

The EU’s Sustainable Finance Disclosure Regulation (SFDR) is expected to provide clarity once it goes into effect in January 2023. But for fund managers, knowing what they need to report is just part of the battle. They still have to be able to access relevant data — and what constitutes relevancy for investment comparison purposes can be a bit of a moving target.

When Antonis Anastasiou, head of AIFM at Alter Domus, joined an expert panel on ESG data collection for Private Debt Investor (PDI), he said that while most private debt funds are trying to conduct ESG evaluation within every step of the investment value chain, the focus can vary from one GP to the next.

“GPs still struggle to source, capture, and share data around some of the most frequently requested metrics, particularly around Scope 1 and 2 carbon emissions,” Anastasiou said. Less than 30% of GPs could provide LPs with data on all principal adverse indicators.

ESG data extraction and collection can be streamlined, making fund managers’ jobs easier and adding value to investment decision-making. Anastasiou and the other experts interviewed by PDI, including lawyers, fund managers, and ESG leaders, discuss the challenges of ESG data and provide best practices for reporting here (subscription required).

Discover Alter Domus' ESG practices and learn more about our ESG Reporting Solutions.