Guide to the ESG Data Convergence Initiative (EDCI)

Overview of EDCI

The ESG Data Convergence Initiative (‘EDCI’ or the ‘Initiative’) offers a standardized set of ESG metrics for comparative reporting intended to benefit stakeholders in the private markets. EDCI was launched in September 2021 and now counts over 325 members: approximately 221 general partners, and 104 limited partners and investment managers, all of whom manage a total of around $27 trillion in assets.

Addressing the Mounting Volumes of ESG Data

The Initiative was established by founding members, CalPERS and Carlyle, to address two main problems. First, investors’ need for comparable ESG data across the private equity industry. Secondly, a lack of standardized ESG metrics collected by general partners. With an increasing number of sustainability reporting frameworks (CSRD, SFDR, TCFD, CDP, ISSB, UNPRI), general partners have the unenviable task of assessing which of the associated ESG metrics should be collected across their portfolios. The variation in data collection and reporting across PE firms and lack of consensus in the industry also creates difficulties for limited partners to evaluate relative ESG performance. The purpose for the development of EDCI was to drill down through the mountain of ESG metrics and to select those that are most relevant to the PE industry. In this way, the Initiative arrived at a much more simplified list of metrics that are nevertheless informed by pre-existing and globally-accepted frameworks, including GRI, SASB, TCFD and SFDR. Ultimately, the goal of the Initiative is to reach a critical mass of PE firms who collect and report on meaningful, standardized ESG data.

EDCI Metrics

The ESG metrics collected during the 2023 reporting cycle are listed below. These are grouped into six core categories. The EDCI Steering Committee, which comprises member GPs and LPs, reviews these metrics annually for relevancy and provides updates for the next reporting cycle.

GHG emissions	Scope 1 Scope 2 Scope 3 (optional)
Renewable energy	% renewable energy usage
Diversity	% women on board % women in C-suite (optional) % underrepresented groups on board (optional) % LGBTQ on board (optional)
Work-related accidents	Injuries Fatalities Days lost due to injury
Net new hires	Net new hires (organic and total) Turnover
Employee engagement	Employee survey Employee survey response (optional)

EDCI follows these guiding principles when developing its metrics:

• Globally accepted: Selected from the most accepted and widely regarded frameworks; including GRI/WEF, SASB, and TCFD (and EU SFDR as formalized).
• Meaningful: From a financial or societal impact perspective; may be specific to a given industry.
• Comparable: Allowing performance comparisons between portfolio companies and GPs; adequate overlap exists across sectors.
• Dynamic: Evolving metrics as tracking improves and understanding and materiality evolves.
• Straightforward: Simple to track accurately, with limited total number of metrics to not overburden companies and ensure data quality and integrity.
• Actionable: Tied to specific actions under GPs and portfolio companies’ control.
• Objective: Metrics should minimize subjectivity or need for interpretation.

Benchmarking

Boston Consulting Group (BCG) is the technical advisor to EDCI. BCG played a pivotal role in EDCI’s establishment and has been named its long-term benchmarking and advisory partner for an initial three-year term. BCG’s wholly owned subsidiary, BCG Expand, serves as the third-party aggregator of anonymized data reported by EDCI members. BCG Expand develops benchmarks using this anonymized data, which is made available only to EDCI members, enabling comparisons against peers across verticals, such as industries and investment strategies. For instance, growth equity funds can gauge their performance with respect to Scope 1, 2, and 3 emissions, workforce diversity, and more against peers. Pulsora supports EDCI benchmarking information directly in our platform, as shown below.

Preparing for the 2024 EDCI Reporting Cycle

Data collection for the 2023 calendar year will be due on April 30, 2024. Pulsora is a proud partner of EDCI. We work directly with private equity clients to streamline the data collection and reporting process for EDCI and many other reporting frameworks. Through Pulsora, GPs can submit their data for the 2023 reporting period directly to EDCI in a validated, anonymized format. Pulsora customers will also have access to EDCI benchmarking information directly in our platform, in addition to More on Pulsora Pulsora is an integrated, comprehensive, and flexible cloud-based platform to help companies define, capture, and improve relevant sustainability metrics to exceed stakeholder expectations. Our solution is specifically designed to facilitate compliance with frameworks like EDCI and many others. The following features of Pulsora are critical to supporting companies on their journey to EDCI reporting:

• Assurance/Audit Capabilities: Designed for audit and assurance with a powerful workflow engine and ability to attach evidence allows for easy audit and assurance.
• User Customizability: Built for the dynamic ESG landscape. Intuitive user interface coupled with extensible data model caters to shifting stakeholder requirements.
• Trusted System of Record/Reference: Single point of visibility for all sustainability metrics across the value chain, built-in analytics, data validation rules, benchmarking, and performance tracking against goals.

Reach out to Pulsora for more information on how we can assist you with your sustainability reporting needs.