Seeing in the Dark: Sustainability Data in Private Markets

Private markets are on a trajectory that few outside the investment world fully grasp. Once a niche corner of finance, they are beginning to rival public markets in their pace of capital growth and influence over the global economy. As of 2023, private market assets under management neared $12 trillion, with projections to exceed $15–18 trillion by 2027. Private equity alone accounts for trillions in deployed capital, shaping industries from infrastructure to healthcare.

Now, policy shifts such as the U.S. executive order opening 401(k) plans to private equity are expected to draw millions of ordinary investors into these once-exclusive funds. That expansion of capital into these venues raises a profound question:

How do we understand what’s happening inside these markets?

The Transparency Gap

Unlike publicly listed companies, private equity holdings operate largely in opacity. They aren’t subject to quarterly earnings calls, SEC filings, or market disclosures. Their data is fragmented and spread across fund reports, consultant memos and private databases.

The CFA Institute recently found that the lack of transparency ranks second only to illiquidity among investor concerns in private markets. Valuation reports are infrequent, performance data inconsistent and fees complex. This information asymmetry poses challenges not only for investors but for regulators, policymakers, and the public as private equity plays an ever-greater role in economies and retirement systems.

As expected, the focus has been mostly on risk, but this opacity is also an opportunity.

Where traditional disclosures end, sustainability data begins to fill the gap by offering a new lens into how companies actually operate, manage risk and build long-term value.

Making the Invisible Visible

Sustainability metrics provide visibility into the operational health of businesses that otherwise operate beyond public scrutiny. They reveal dimensions of resilience, risk and strategy that financial statements alone cannot.

• Climate and supply chain resilience: Metrics like energy use, carbon footprint, or supplier sustainability practices illuminate vulnerabilities in global supply chains which is often where private companies are most exposed.

• Workforce quality and stability: Indicators such as turnover, safety, and diversity data give insight into management strength and productivity drivers.

• Regulatory and market readiness: Tracking compliance, emissions and product responsibility reveals whether a company is aligned with emerging policies and shifting customer values.

Sustainability data doesn’t just describe a company’s footprint, it’s their foresight. And in private markets, foresight is business value.

From Compliance to Competitive Edge

What began as a compliance exercise has evolved into a source of strategic differentiation and performance.

• EY-Parthenon found that private equity funds with advanced ESG integration achieved internal rates of return up to 8 percentage points higher than peers.

• BCG reported that general partners attribute 4–7% EBITDA improvement during a typical holding period to sustainability initiatives—from decarbonization to workforce development.

• According to this review by Anthesis Group, firms embedding ESG into investment processes saw 6–7% higher exit valuation multiples and faster revenue growth.

Sustainability data helps investors see what drives durability and performance. It turns the qualitative (culture, resilience and risk posture) into quantitative insight that informs valuation and strategy.

The Economics of Transparency

Contrary to earlier sentiments in private equity about greater openness comprising their edge, we’re now in an era where it’s becoming a driver of trust and capital access.

As fundraising conditions tighten and Limited Partners (LPs) demand more evidence of value creation, firms that can show measurable sustainability outcomes are better positioned to attract capital. In effect, transparency builds credibility while credibility reduces friction.

This is particularly important as private equity integrates into retirement portfolios and other mass investment vehicles. The more ordinary investors are exposed to private markets, the higher the bar becomes for visibility, accountability and alignment with long-term value.

Emerging frameworks are reinforcing this trend. The Institutional Limited Partners Association (ILPA) has expanded reporting templates to standardize performance and valuation data. The International Sustainability Standards Board (ISSB) is advancing baseline sustainability disclosure standards expected to influence private markets through LP and regulatory channels.

The direction is unmistakable: with the value of opacity failing, data is the new competitive advantage.

A Cultural Shift Toward Data-Driven Ownership

Leading private equity firms are now embedding sustainability metrics directly into operational playbooks, treating them as levers for value creation, not just compliance. ESG indicators are being tracked alongside financial KPIs in 100-day plans, board dashboards, and exit strategies.

This cultural shift is producing a new model of active ownership:

• Setting carbon and sustainability targets at acquisition.

• Tracking progress quarterly.

• Presenting verified sustainability data at exit as part of the value story.

As buyers increasingly pay premiums for companies with credible sustainability track records, the ability to prove progress through data and not just narrative has become a strategic differentiator in due diligence and sale processes.

Private Equity’s Unique Position

Ironically, the very characteristics that make private markets opaque like tight ownership structures and long-term horizons, also make them ideal environments for driving sustainability performance.

As Harvard Business Review observed, private equity is uniquely positioned to lead on sustainability because general partners can directly influence governance, operations, and long-term strategy. Indeed, evidence shows that PE-backed companies improve sustainability performance faster than public peers during the holding period.

The reason is simple: the incentives are aligned. As we’ve shown, improving sustainability metrics boosts operational resilience, reduces risk, and enhances exit valuation.

A New Standard for Understanding Value

Sustainability data offers a way to see inside private markets without typical public disclosures. It translates qualitative management quality into measurable indicators, creating a more informed, more trustworthy private investment ecosystem.

As private capital becomes more embedded in the global economy in everything from infrastructure to healthcare to retirement, the sustainability lens is essential. Transparency is becoming the new due diligence with sustainability data acting as a key financial signal. Together, they form the foundation of trust and performance in an era where private markets no longer exist outside public consequence.

Building Clarity Into Capital

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