Updated in 2024, ILPA first released this ESG Assessment Framework in 2021 to help limited partners evaluate and understand the various stages of ESG integration that peers are observing among general partners in the marketplace.
Many LPs seek alignment from their GPs with respect to the consideration and management of environmental, social, and governance factors, particularly as these factors pertain to material risks and investment opportunities. ILPA’s framework is designed to help LPs benchmark GP responses to due diligence efforts, inform goal-setting conversations with GPs and measure ESG integration progress over time. The Framework categorizes activities and processes across four buckets: Not Present, Developing, Intermediate and Advanced.
The ESG landscape has evolved meaningfully since this framework was initially released. Anticipating this evolution, it has been ILPA’s commitment to periodically revisit and update the Framework to ensure it keeps pace and remains relevant with continually developing market practices.
The 2024 update has been revised to reflect:
– An increased focus on ESG integration across firm management and operations; with intermediate and more advanced processes reflecting clear ownership and the role the investment committee and portfolio operating partners play in the overall process
– Stronger links between ESG factors and value creation, including more robust descriptions of how considerations can factor into pre-investment due diligence, post-investment management, and portfolio company exit strategy
– The evolution of the ESG metrics and disclosure landscape; including specific references to the ISSB, ESG Data Convergence Initiative, and the Private Markets Decarbonization Roadmap
We expect LPs will adapt the Framework as appropriate. The Framework is meant to be representative but not exhaustive and should not be considered a comprehensive guide to best practice in the market.
We invite all participants in the PE community to send any feedback or questions to esg@ilpa.org.
