Dive Brief:
- Carbon management and software platform Gravity Climate, whose client roster is composed of private equity firms, announced their formal support for the ESG Data Convergence Initiative on Tuesday, as the private equity industry continues to build its influence in portfolio ESG operations.
- The EDCI was launched in 2021 by the Canada Pension Plan Investments board and global private equity firm Carlyle Group; it also is supported by Boston Consulting Group. The industry-led initiative was the first of its kind for the private equity community, Gravity Climate said, as it looks to build a consensus on what environmental, social and governance data the industry needs.
- “EDCI is particularly impactful because the world of private equity has a massive opportunity to influence so many different companies that don't necessarily receive direct pressure” from coming disclosure regulations, Saleh ElHattab, founder and CEO of Gravity Climate, told ESG Dive.
Dive Insight:
Gravity Climate, which aims to provide firms with carbon slashing and accounting solutions for their supply chain operations, also announced the creation of a new feature that will allow it — and the rest of the initiative’s over 375 members — to automatically share data with the EDCI. Gravity Climate, which helps private equity firms manage their portfolios, will give EDCI members access to their platform and allow them to easily collect the information required by the coalition.
EDCI’s members have an estimated $28 trillion in assets under management, and there are more than 4,300 companies included in EDCI’s benchmark data. The move helps Gravity Climate keep close track of the organizations “actually generating emissions and, as a result, have the surface area for action,” ElHattab said.
“A lot of people when they think about ESG, or sustainability or carbon accounting, think of it as like a pure metrics game,” ElHattab told ESG Dive. “We have leaned into partnerships with these organizations that basically cascade pressure down to the companies that are actually energy emitting.”
By joining EDCI, Gravity Climate joins a coalition with a consistent framework for data collection, industry-wide benchmarks and an annual reporting cycle. All of which give private equity “a better understanding of where they can adjust their strategies and meaningfully improve performance,” the release said.
Prior to the EDCI, private equity firms were inundated with data requests to general partners, from limited partners creating “a chaotic mess of information going back and forth," all asking the same kind of questions but in slightly different ways, Tim Mohin, a partner and director at Boston Consulting Group, told ESG Dive.
BCG considers private equity firms “a powerful change agent” for driving sustainability and climate changes at companies and have found ESG to become a big source of differentiation and value creation for firms.
ElHattab said part of the reason Gravity Climate officially joined the initiative is due to the success they’ve had working with other members of the collective, such as private equity firms Middleground Capital and New Mountain Capital.
Prior to their collaboration, Middleground was unsatisfied with the carbon measurements it had done and wanted to go further and begin the process of decarbonization, ElHattab said.
The partnership has helped Middleground “effectively” measure its carbon footprint and “implement decarbonization plans with our portfolio companies that drive measurable reductions in emissions while also delivering business value,” Madelyn Tutewiler, Middleground’s ESG director, said in a release.
