As private markets grow in size and influence, so does the need for transparent, comparable ESG benchmarks. Self-assessments and proprietary ratings lack standardisation, which makes it hard for investors to compare ESG performance across portfolios. Structured frameworks such as the ESG Data Convergence Initiative (EDCI) were created to fix that. This article looks at how the EDCI works, which other frameworks matter for private equity and how to put benchmarking into practice.
For a real-world view of ESG creating value, see how private equity firms turn ESG compliance into profit.
What is the ESG Data Convergence Initiative (EDCI)?
The EDCI was launched in 2021, initially driven by the Bureau of Asset Management of the New York City Retirement Systems together with a group of leading private equity firms, and is now run in partnership with the Institutional Limited Partners Association (ILPA). Participating general partners collect a core set of ESG metrics from their portfolio companies each year using standardised definitions:
- Greenhouse gas emissions, with Scope 1, 2 and 3 coverage.
- Net-zero commitments.
- Renewable energy consumption.
- Board and C-suite diversity.
- Work-related injuries.
- Net new hires and employee engagement.
The data is validated and aggregated into an anonymised benchmark by Boston Consulting Group before being shared with LPs, so each firm can compare its portfolio with the wider market without exposing company-level data. The initiative now brings together more than 500 general and limited partners and covers more than 9,000 portfolio companies; data collection for the 2025 reporting year closed on 30 April 2026.
Why benchmarking matters in private equity
Benchmarking ESG performance is not just about compliance; it is a strategic advantage. When LPs see consistent, validated data across your portfolio, they gain confidence in your investment thesis. Benchmarking also:
- Identifies good practice: highlighting top-performing portfolio companies encourages knowledge sharing.
- Reveals improvement areas: pinpointing inefficiencies, from energy intensity to safety, for targeted intervention.
- Strengthens investor relations: demonstrating transparency to ESG-minded LPs, many of whom need the data for their own SFDR disclosures.
How the EDCI process works
- Standardisation: participants agree definitions. Greenhouse gas emissions, for instance, follow the GHG Protocol so comparisons are like for like.
- Aggregation: each GP submits results to the benchmarking partner, where they are anonymised and pooled into an industry-wide benchmark.
- Analysis and feedback: participants compare their metrics with peer averages by sector, region and company size, and use the insights to validate or adjust strategy.
Beyond EDCI: other frameworks that matter
1. GRESB
GRESB is the investor-driven ESG benchmark for real assets. Alongside its real estate assessment it runs infrastructure fund and asset assessments, so it is relevant for private equity managers with infrastructure, energy or real estate exposure. It scores management practices and performance data such as energy, water and waste.
2. ISSB standards (IFRS S1 and S2), incorporating SASB
The ISSB standards are the global baseline for investor-focused sustainability disclosure. IFRS S2 absorbed the recommendations of the former Task Force on Climate-related Financial Disclosures (TCFD), which was disbanded in 2023, and the ISSB now maintains the industry-specific SASB standards. Although designed for public markets, they give private equity firms a recognised structure for climate risk reporting and sector-specific metrics that complement the EDCI's core set.
3. CSRD and ESRS
In the EU, portfolio companies in scope of the CSRD report under the ESRS, which cover the same emissions data the EDCI asks for, plus a much broader set of topics selected through double materiality. The voluntary standard adopted alongside the revised ESRS in July 2026 also caps what large companies can ask of the smaller businesses in their value chain, which helps keep data requests to portfolio companies proportionate.
Practical steps to implement ESG benchmarking
1. Integrate with a data platform
Reducing reliance on spreadsheets is crucial. Explore the options in our guide to modernising ESG data management in portfolio companies to gather, validate and visualise metrics.
2. Define material metrics
Even within the EDCI's structure, not every metric carries the same weight in every portfolio. Align with your materiality analysis, as discussed in our guide to ESG materiality for portfolio companies.
3. Engage portfolio companies
Benchmarking is only useful if the underlying data is accurate and consistent. Give portfolio companies training, clear guidelines and tools that make reporting easy, ideally ones that read their invoices rather than asking them to fill in another template.
4. Communicate with LPs
Investors want to see clear year-on-year progress. Summarise benchmark outcomes in quarterly or annual reports and link improvements to financial performance where you can.
Limitations and challenges
- Uneven adoption: not every firm participates in the EDCI or similar frameworks, which limits some peer sets.
- Evolving metrics: ESG is dynamic. New rules or market demands change which metrics matter most.
- Jurisdictional complexity: differing regional standards complicate global comparisons.
Where ESG benchmarking is heading
Expect continued consolidation around standard metrics, more frequent data and AI-assisted data validation. For more on how technology will shape ESG strategy, see the role of AI and technology in modern ESG management.
Benchmarking ESG performance in private markets is no longer optional. Frameworks such as the EDCI simplify comparison and drive industry-wide improvement, enabling GPs to demonstrate leadership and build trust with LPs, and combining them with GRESB, the ISSB standards or the ESRS gives a fuller picture of a portfolio's footprint. The common denominator is emissions data calculated the same way for every company, which is what Manglai's carbon footprint software delivers for investment funds and their portfolio companies.
