9 February, 2024 / News

MSCI launches sustainability data tool for private market investors

Provides general partners with private companies' sustainability data

MSCI launches sustainability data tool for private market investors

MSCI has collaborated with Persefoni and Apollo Private Capital to launch a tool designed to drive transparency and a common language for investors in private markets considering companies’ sustainability and climate data.

The MSCI Private Company Data Connect is a centralised hub providing general partners (GPs) access to private companies’ sustainability and climate data and disclosures.

Using the tool, GPs should be able to execute due diligence and risk management processes; respond to client and regulatory sustainability reporting requirements; and develop sustainable value creation strategies such as engagement and target setting for their portfolio companies.

Companies will be able to retain ownership of their self-reported data and can approve or decline data requests from GPs and lenders directly on the platform.

“As companies’ sustainability and climate considerations are increasingly being used in capital allocation, lending and other decision-making processes, investors need an efficient and effective way to share and analyse this critical data,” said Eric Moen, head of ESG at MSCI.

“In recent years, there has been an uptick in global regulator and client demand for more reporting and data around the overall sustainability of GPs’ investments. MSCI Private Company Data Connect is designed to give investors similar levels of insight into private companies’ sustainability practices with which they assess publicly traded corporations, underscoring MSCI’s deep commitment to enhancing transparency across the global private asset investment landscape and helping investors manage complex, total portfolios.”

The product’s development has been spearheaded by Apollo, with the aim of closing the environmental and carbon emission reporting gap between public and private companies. According to Apollo, this is vital for private equity and private credit investors and for solving the Scope 3 challenge, as the gap is significant – a 2022 research paper from Bain and CDP shows that 64% of public companies by market cap report environmental data, compared to less than 1% of private companies.

As part of the collaboration, the tool will leverage the template developed by ESG Integrated Disclosure Project (ESG IDP) – an industry initiative bringing together leading lenders in the private credit and syndicated loan markets to improve transparency and accountability.

“By working with MSCI and Persefoni to support the establishment of a platform that leverages ESG IDP, we’re able to better respond to the unique challenges and opportunities of the private markets,” said Michael Kashani, managing director and head of ESG credit at Apollo, and inaugural chair of the ESG IDP executive committee.

“Increasing standardisation and driving transparency on material ESG factors reinforces our focus on value creation and meeting stakeholder needs.”

The tool also utilises carbon accounting software from Persefoni. Kentaro Kawamori, CEO and co-founder of Persefoni, added that the collaboration targets “a pivotal area in today’s corporate sustainability efforts, closing the carbon emissions reporting gap for both public and private companies.

“This initiative represents a material stride towards enhancing transparency in private assets, a sector where data accessibility has traditionally been challenging.”

A part of the Mark Allen Group.