Megan Starr: ‘moment of reckoning’ needed on ESG data

Too much time is spent talking about ESG data rather than using it to drive change in portfolio companies, according to the global head of impact at investment firm Carlyle.

Megan Starr, speaking at the UN PRI in-person event in Barcelona, said that Carlyle received more than 300 ESG data requests from its Limited Partners every year. “They all ask for slightly different data in a slightly different format in a slightly different way,” she said.

“I think when we look at the private equity field, in particular, I would posit 95% of time and energy is spent on talking about ESG data and trying to collect many different versions of the exact same metrics. And probably 5%, and that’s being generous, is spent on actually using that data.”

Starr said that all stakeholders wanted more meaningful, comparable and quantitative metrics that could be used alongside financial data. “But in pursuit of that objective, we are going in 1,000 different directions.”

Corporate disclosures

She was speaking at a session on “corporate disclosures – how do global sustainability standards meet the needs of investors?”

“We spend too much time talking about the data, and things like interoperability, and not enough time actually using it to drive change. I think we need a moment of reckoning in the field and to take a hard look and say, ‘maybe we need to stop having conversations about this’ and maybe we need to start rationalising,” she said

Increased regulatory scrutiny will lead to a “pullback” on voluntary ESG disclosures, she suggested. “We keep talking about the intellectually perfect idea of what data could look like. And we are really divorced from the reality on the ground of what our companies are dealing with.”