EDF Releases New ESG Management Tool for Private Equity

We're gratified by the response to our new tool for measuring environmental, social and governance performance in the private equity sector, which for the first time defines the practices needed to build a successful ESG management program and provides a framework to assess and improve ESG management at firms of all sizes.

EDF developed the free Excel-based tool in collaboration with Irbaris, a strategy consulting firm specializing in sustainability. Our goal is to make measuring and managing ESG performance a standard practice for value creation across the private equity sector.

In less than an hour, users of the tool can evaluate performance across 22 best practice areas, including commitment and leadership from the top, access to ESG resources, integration of ESG management into the investment process and portfolio company operations, and measuring and reporting results.  The broader framework assesses performance across four categories: leadership, management, investment process and reporting results.

We expect the tool to be used by:

  • General Partners to compare their current approach with best practices and to develop plans for improvement;
  • Limited Partners to assess general partners’ ESG performance and to compare practices across firms;
  • Consultants to provide analysis for their clients; and
  • Media and research teams to evaluate the industry's performance to develop reports or stories.

The tool works by giving users a detailed analysis of the firm's practices and a menu of strategic initiatives to consider. We're grateful for the thorough peer review of the tool and feedback we received from a broad range of stakeholders, including Actis, Blackstone, Bloomberg, BSR, The Carlyle Group, Doughty Hanson, Harvard Management Company, Kohlberg, Kravis & Roberts Co.(KKR), Oak Hill Capital Partners, PwC US and TPG.

The tool was also informed by our experience partnering with prominent private equity firms including KKR, Carlyle Group and Oak Hill Capital Partners.  These partnerships combined have impacted over 30 portfolio companies and resulted in approximately $370 million dollars of operating cost savings or revenue growth as well as 820,000 metric tons of avoided CO2 emissions. Going forward, EDF will work with BSR and other industry partners to broadly disseminate the tool across the industry. We welcome any additional feedback or questions about the tool specifically, or ESG management generally.