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BlackRock expands partnership with private markets investors to create tech-enabled universal solution for ESG reporting

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BlackRock has announced that a consortium of Limited Partners (LPs) and funds of funds have partnered in an effort to streamline and standardise ESG reporting for private markets.

The partners will leverage ESG Outreach, an eFront Insight solution developed in partnership with private markets investors to accelerate and simplify the collection, analysis, and reporting of ESG data.

Aligned with existing disclosure frameworks and ESG reporting initiatives, the tech-enabled solution helps to lower the high costs of technology and specialist knowledge associated with ESG monitoring. The solution is available to over 2,500 General Partners (GPs) reaching over 70,000 private companies in the eFront Insight network. 

“Investment professionals in alternative asset classes have a growing need to access ESG data to help identify risk and opportunities,” said a statement from BlackRock announcing the expansion of the private markets partnership. “However, private market participants looking to incorporate ESG factors face complex decisions on which metrics are considered relevant due to the large array of frameworks in circulation and the evolving regulatory landscape.”

The firm added: “These challenges are amplified by the lack of in-house ESG resources and the cost of technology to support ESG data sourcing and analysis. The lack of adoption across a single framework means LPs struggle to consolidate data across their portfolios and frequently send time-consuming bespoke data requests to their GPs.”

The ESG Outreach solution, launched in June 2021, simplifies and standardizes these various approaches by establishing a robust reporting framework, including a set of universally relevant questions that align with existing reporting initiatives.

It also helps to facilitate compliance with the Task Force on Climate-Related Financial Disclosures (TCFD) and Sustainable Finance Disclosure Regulation (SFDR) disclosure regimes. Companies that have aligned to an existing framework can choose to use ESG Outreach as a scalable data aggregation solution. By focusing on the needs of the whole ecosystem, including both LPs and GPs, ESG Outreach is positioned to help accelerate the availability of ESG data within private markets and simultaneously create a benchmark of key ESG metrics.

“Investors and managers alike are asking to better understand the impact on environmental, social and governance matters related to their investments,” says Melissa Ferraz, head of eFront Insight at BlackRock. “ESG Outreach directly targets the barriers that exist in private markets ESG reporting by providing a universal solution to streamline and standardise ESG data. The solution embeds BlackRock’s experience in investment operations with the experience of our partners, helping to level the playing field no matter how far along a company is in their ESG journey. We are excited to build on our collaboration with the private market ecosystem to create greater transparency and enhanced reporting practices.”

Oliver O’Bryan, ESG specialist at Partners Group, one of the leading partners in the initiative, says: “As a global direct investor and investor into portfolio assets, we serve high volumes of demanding data requests from our clients, which we strive to process efficiently. It is also time consuming to unravel key metrics from the various frameworks in use to fulfilling regulatory reporting requirements. Our support of this initiative is based on the synergies it creates across the whole ESG data ecosystem, providing consistency between the assets we own on behalf of our clients, us as an investment manager and our clients.”

Daniel Gregor, head of asset management for indirect strategies at Allianz Global Investors, says: “We at AllianzGI started our sustainable investing journey over 20 years ago and were among the first 50 asset managers to sign the United Nations Principles for Responsible Investment (UN PRI) in 2007. As an active investor in Private Equity, ESG is core to our ability to generate returns. ESG reporting is key for our investment strategy and our clients. In order to facilitate data collection and seize them best we support this initiative to ensure a consistent set of data for the industry.”

Said Lynn Baranski, global head of investments for BlackRock Private Equity Partners, says: “We firmly believe that transparency and data are fundamental to robust ESG analysis, and this initiative is a key priority for us as we continue to enhance the way we collect, evaluate and measure ESG data across our investments. We have been supportive of this initiative from its inception, which extends eFront Insight’s leading capabilities to provide a centralized and consistent solution for financial data in private markets to include relevant ESG metrics. We are encouraged to see the positive market response to date and excited for further adoption across private markets.”

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