Following a 16 month consultation and drafting process that involved a group of more than 40 limited partners (LP), 20 industry associations (including the PRI Initiative) and 10 leading general partners (GP), a new Environmental, Social and Corporate Governance (ESG) Disclosure Framework for Private Equity has been published on 25 March 2013.
The ESG Disclosure Framework has been developed to help GPs better understand why LPs want ESG-related information and to help rationalise the types of questions LPs are increasingly asking GPs on ESG.
This framework is aligned with the Initiative’s efforts to encourage informed and systematic dialogue between LPs and GPs about how ESG factors are considered in PE investment activities. Where feasible, the PRI has aligned its Reporting Framework with the ESG disclosure framework to support a consistent, pragmatic and cost-effective approach to discussing ESG strategy, policy and practices.
The document outlines eight objectives common to many LPs who want more structured ESG disclosures within their private equity investments. The first five objectives relate to the fund due diligence process, and the next three relate to disclosures during the life of the fund. Guidance is also provided on the disclosure of information around unexpected events that might pose reputation risks to an LP, GP or portfolio company.