ESG Data: The Key to Sustainable Investments in Private Markets

ESG data: The key to sustainable investments in private markets

Author: Stuart Tait

Published date: 12 October 2025

This guide is designed for investors, asset managers, and industry leaders who understand that ESG integration is the future of sustainability investing.

Contents

The growing importance of ESG in private markets

The investing world is undergoing a profound transformation, driven by a heightened awareness of the interconnectedness of financial performance and ESG factors. A striking 89% of investors now consider ESG factors in their investment decisions.

The fact is that ESG considerations are increasingly becoming a determining factor, with 79% of investors considering how a company manages ESG risks and opportunities as crucial in their investment choices.

This growing importance is reflected in the substantial flow of capital towards sustainable investments.

Understanding the key ESG data challenges in private markets

While the importance of ESG in private markets is undeniable, the path to effective integration is fraught with challenges. A significant 53% of global respondents identify "poor quality or availability of ESG data and analytics" as the biggest barrier to adopting sustainable investing.

ESG data availability and quality

Unlike their public counterparts, private companies aren’t mandated to disclose ESG data in a standardized format. This results in fragmentation, where information is often scattered across disparate sources, making it difficult to access and assess. Even when data is available, concerns about its accuracy, completeness, and reliability remain.

Comparability

The lack of uniform ESG reporting frameworks in private markets presents a major challenge.

Materiality

Determining which ESG factors are most relevant for a particular industry or company—a concept known as materiality—is a complex task.

Integration into investment decisions

Even with access to ESG data, effectively incorporating it into investment decision-making processes isn’t straightforward.

Best practices for ESG data collection and analysis

Managing the challenges of ESG data in private markets requires a proactive, multi-faceted approach.

Building an ESG data framework

To overcome the lack of uniformity in private markets, establish a comprehensive ESG data framework tailored to the specific needs of your asset classes.

Engaging with portfolio companies

Active engagement with portfolio companies is crucial for gathering accurate and comprehensive ESG data.

Leveraging technology and data solutions

Technology plays a pivotal role in streamlining the collection, analysis, and reporting of ESG data.

The benefits of ESG data-driven investment strategies

Incorporating ESG data into investment strategies is a strategic imperative for private market investors seeking to tackle an increasingly complicated and interconnected world.

Enhanced risk management

ESG data provides a lens through which investors can identify and assess a wide array of risks that traditional financial analysis may overlook.

Value creation and alpha generation

Beyond risk avoidance, ESG factors are also powerful drivers of value creation.

Alignment with investor values

For many investors, ESG considerations are about aligning investments with personal values and contributing to a better world.

Meeting growing stakeholder expectations

Investors are increasingly facing pressure from clients, regulators, and the public to demonstrate their commitment to ESG principles.

Using ESG reporting frameworks for investment decisions

Understanding ESG reporting is crucial for investors seeking to make informed decisions in private markets.

Why investors should care about ESG reporting frameworks

Even in the less regulated private markets, ESG reporting frameworks are more than just corporate buzzwords.

How investors can use ESG reports

ESG reports can be powerful tools in an investor's arsenal.