For the financial system to drive decarbonization across the entire real economy, all major asset classes must be involved. With increased capital flowing into private markets, transparency on environmental impacts from private companies is crucial to prevent asset class emissions leakage.
As financial institutions assess and address their financed emissions, the lack of standardized disclosures and insights on environmental impacts presents a clear risk to their portfolios and broader climate transition strategies. While climate reporting among publicly traded companies has become increasingly mainstream, standardized disclosures are lagging for private companies.
The CDP Private Markets Pilot will facilitate engagement, disclosures and data insights for private companies through a customized questionnaire and benchmarking solution that is tailored specifically to private markets.
In 2021, CDP expanded the scope of its disclosure infrastructure by creating the first-ever standardized environmental metrics specifically aimed at portfolio companies of private markets investors. This program aims to facilitate disclosures from portfolio companies, establish transparency, and manage environmental performance.
The customized Private Markets Questionnaire is fully aligned with TCFD framework and is cross-thematic, covering climate change, deforestation and water security impacts.
CDP disclosure can satisfy the need for reporting standardization and benchmarkable data in private markets.
Streamline environmental responses from portfolio companies, as CDP disclosure is aligned with the TCFD and SBTi frameworks
Gain insights on environmental practices and impacts of portfolio companies
Get ahead of regulation and future policy mandates
“The CDP Private Markets Pilot represents an important step in helping narrow the gap of climate-related disclosure for private companies. We believe proper measurement and disclosure of climate-related risks and opportunities can help better prepare companies to manage the climate transition, while also enhancing their potential long-term sustainable value.”Bridget Bartlett, Head of ESG, Beach Point Capital
The purpose of CDP’s Private Market pilot is to aid private markets investors’ progress on the measurement, benchmarking, and reduction of portfolio emissions.
Private companies, particularly those that are mid-market, or smaller, are in the early stages of their emissions accounting and environmental reporting journey. There is a critical data gap when it comes to the environmental impact of private companies as well as the portfolio emissions of private equity investors.
To equip investors with credible emissions estimates, CDP’s private markets questionnaire facilitates standardized reporting of key data inputs relevant to model emissions per CDP’s publicly available methodology. For private companies that are currently unable to self-report their emissions data, this offers an interim solution on emissions baselining.
With one of the largest databases of corporate environmental data in the world, CDP utilizes reported data from more than 7,500 private companies, to produce Scope 1 and 2 emissions estimates. Scope 2 estimates are based on bottom-up modelling. This can be applied to scope 1 estimates as relevant, on request. CDP uses the private company database to provide benchmarking and peer analysis on the overall questionnaire.
Private markets investors can request information from portfolio companies through CDP's Private Markets Questionnaire. The steps to respond to an investor's request is as followed:
For further information contact [email protected]
In May 2022, CDP collaborated with Bain & Company on a study that shows the public-private environmental transparency gap.
Understand how private companies can gain tangible business benefits from disclosing to CDP
Understand CDP’s request for portfolio companies of private markets investors