Monitoring & Reporting

Responsible Investment Reporting Resources:

• What are the Principles for Responsible Investment? | PRI – Various resources and insights published by PRI.
   

• ESG reporting template - ESG reporting standards guide | Invest Europe – Bringing together key ESG reporting frameworks relevant for European (PE/VC) investors today, this Invest Europe GP-LP ESG reporting template aims to facilitate ESG data collection and reporting to LPs and includes reporting recommendations comprising a set of key ESG aspects and metrics.  
   

• IFRS Sustainability Standards Navigator | IFRS – IFRS 1 and 2 are the first two standards of the International Standards Board (ISSB). IFRS S1 focuses on disclosures on sustainability risks and opportunities and IFRS S2 focuses on climate change-related risk and opportunity disclosures.

 

Metric Setting:

• ESG Metrics in Private Equity | SMI – This paper authored by PESMIT, is positioned as a thought process which can be followed when identifying ESG metrics relevant to decision making, that have the ability to influence business strategy, investment opportunity and value creation.

 

Climate Change Reporting and disclosures:

• Initiative Climat International (iCI) and industry guides | ICi – Helpful guides for the industry produced by iCI covering TCFD, accounting for and reporting on Greenhouse Gas emissions and setting science-based targets.
   

• Task Force on Climate-Related Financial Disclosures | TCFD – The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information.

 

Biodiversity Reporting and disclosures:

• The Taskforce on Nature-related Financial Disclosures | TNFD – The Taskforce on Nature-related Financial Disclosures (TNFD) has developed a set of disclosure recommendations and guidance for organisations to report and act on evolving nature-related dependencies, impacts, risks and opportunities.

 

Benchmarking and Reporting Frameworks:

• CDP – CDP is a not-for-profit charity that runs the global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.
   

• The UK B Corporation Movement | B LAB UK – B Lab certification is a third party standard requiring companies to meet social sustainability and environmental performance standards.
   

• The global leader for impact reporting | GRI – GRI is the global recognised sustainability reporting standard.
   

• SASB Standards | SASB – The SASB standards ‘enable organisations to provide industry-based disclosures about sustainability-related risks and opportunities that could reasonably be expected to affect the entity’s cash flows, access to finance or cost of capital over the short, medium or long term’.
   

• Benchmark Report | GRESB – The GRESB Benchmark Report provides an in-depth analysis of the ESG performance of a company, fund or asset participating in the GRESB Assessments.

Private Capital Reporting Tools:

• ESG Data Convergence Initiative – The ESG Data Convergence Project is a reporting tool endeavouring to standardize ESG reporting across private equity and venture capital firms.
   

• ESG reporting standards guide - ESG reporting template | Invest Europe – Bringing together key ESG reporting frameworks relevant for European (PE/VC) investors today, this Invest Europe GP-LP ESG reporting template aims to facilitate ESG data collection and reporting to LPs and includes reporting recommendations comprising a set of key ESG aspects and metrics.  
   

• Responsible investment DDQ for private equity limited partners | PRI – PRI have developed ‘the Limited Partners’ (LP) Private Equity Responsible Investment Due Diligence Questionnaire (DDQ) to help investors understand and evaluate a general partner’s (GP) processes for incorporating material environmental, social and governance (ESG) risks and opportunities into their investment practices and to understand where responsibility for doing so lies.

 

VC Specific Reporting Tools:

• ESG_VC – ESG_VC has developed a venture-ready ESG measurement framework, which asks early-stage companies to answer 48 measures against ESG objectives.

 

Private Credit Specfic Reporting Tools:

• The ESG Integrated Disclosure Project – The ESG Integrated Disclosure Project (ESG IDP) is an industry initiative bringing together leading lenders in the private credit and syndicated loan markets to improve transparency and accountability.

1) Green Finance

The BVCA remains continues to engage with UK policy developments on Green Finance, Net Zero and Biodiversity. The links below relate to recent submissions the BVCA has done on Net Zero and Green Finance.

• BVCA response to BEIS Review of Net Zero: call for evidence – November 2022
• FCA discussion paper on climate change and green finance – January 2019

 

2) Climate Disclosures

The Recommendations of the Taskforce for Climate-related Financial Disclosures are an industry-developed, voluntary risk management and disclosure framework. They offer companies and firms a framework to report on their impact on the climate across four pillars: governance, strategy, risk management and metrics and targets.

Increasingly, policymakers have integrated the TCFD recommendations into some jurisdictions’ regulatory frameworks. For example. the FCA has implemented TCFD-based rules for large UK corporates and asset managers (including large private capital firms).

The BVCA, in collaboration with iCI and KPMG, has produced a practical guide for private capital firms seeking to use TCFD recommendations to report on climate considerations, either voluntarily or under the FCA’s TCFD-based rules (available below).

• TCFD Implementation Considerations for Private Equity
• FCA consultation on TCFD for asset managers – September 2021
• BEIS consultation on TCFD for large corporates – May 2021
• FCA consultation on TCFD for premium listed issuers – October 2020

 

3) UK Sustainability Disclosure Requirements (SDR)

The SDR is a sustainability disclosure and labelling regime intended to apply to UK-regulated firms fully from late 2024/early 2025. It will not initially apply to non-UK funds, but may be extended to them in due course. The SDR regime came out of the Government’s green finance roadmap which set out to align financial systems with the UK’s net zero strategy.

• CP22/20: Sustainability Disclosure Requirements (SDR) and investment labels
• BVCA response to FCA consultation paper CP22/20 on Sustainability Disclosure Requirements (SDR) and investment labels

 

4) UK Sustainability Disclosure Standards (UK endorsement of ISSB – IFRS 1 and 2 framework)

The UK is developing SDS to incorporate the International Sustainability Standards Board (ISSB), and the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards Frameworks. These aim to create a global corporate sustainability reporting baseline to be implemented or adapted by different jurisdictions (the EU is also developing separate European Sustainability Reporting Standards, via the European Financial Reporting Advisory Group). Read more here:

• UK Sustainability Disclosure Standards – IFRS 1 & IFRS 2 | FCA
• UK Sustainability Disclosure Standards | GOV.UK
• BVCA Response to FRC on UK IFRS1 & IFRS2

 

5) UK Green Taxonomy

The UK Green Taxonomy was announced in June 2021 as part of the government’s efforts to improve the environment, accelerate the transition to net zero and create green jobs. The UK Government announced as part of the Green Finance Road map in October 2021, that the taxonomy will apply to corporate, asset owners and managers and to investment products. As part of the updated Green Finance Strategy announcements in March 2023, the UK government confirmed the first taxonomy consultation will take place in autumn 2023.

The Green Technical Advisory Group (GTAG), an expert group chaired by the Green Finance Institute (GFI), providing non-binding advice to the Government on developing the UK Green Taxonomy, launched advice on applying the UK Green Taxonomy to wider policies on 15th August 2023. A link to this report is provided below. Included in the policy recommendations was that corporate disclosure of Taxonomy alignment and eligibility should be required as part of the UK Sustainability Disclosure Requirements (SDR) regime.

• Applying the UK Green Taxonomy to wider policies

1) Sustainable Finance Disclosure Regulation (SFDR)

The SFDR imposes wide-ranging, mandatory disclosure obligations on asset managers and other financial institutions, with the aim of increasing transparency around sustainability within investments. It applies to EU-regulated firms and those marketing funds to EU investors.

• Invest Europe submissions on SFDR
• ESG reporting standards guide - ESG reporting template | Invest Europe
• Getting ready for the Sustainable Finance Disclosure Regulation – September 2021

 

2) EU Taxonomy

The EU Taxonomy Regulation governs the EU’s initiative for an EU-wide classification system of economic activities that the EU defines as environmentally sustainable. The Taxonomy also introduces disclosure requirements for financial services firms in relation to the environmentally sustainable activities carried on by their investments, and disclosure requirements for companies in scope in relation to their own economic activities.

• ESG reporting standards guide - ESG reporting template | Invest Europe
• EU Taxonomy Navigator (europa.eu)

 

3) Corporate Sustainability Reporting Directive (CSRD)

The CSRD is an EU Directive which requires companies to report on the impact of their corporate activities on people and planet.

• Invest Europe submissions on CSRD
• Corporate sustainability reporting
• Reports on development of EU sustainability reporting standards

 

4) Corporate Sustainability Due Diligence Directive (CS3D)

The CS3D is an EU Directive which sets out requirements for due diligence processes within organisations’ value chains, ensuring businesses address the adverse impacts of their actions, including human rights violations and environmental risks, in their value chains inside and outside Europe.