ESG Reporting Requirements: What Fund Managers Must Know for 2025 EDCI Compliance

The ESG reporting landscape for private fund managers has reached an inflection point. Despite political headwinds and institutional deprioritization in some markets, the operational reality remains: 64% of LPs still consider ESG when making investment decisions, according to PitchBook's 2024 survey. Article 8 and Article 9 funds captured 29% of European private capital raised in 2024. And the next EDCI (ESG Data Convergence Initiative) reporting deadline arrives April 30, 2025. Fund managers who dismiss ESG as a passing trend are miscalculating—those who build compliant reporting infrastructure are winning allocations from ESG-conscious capital.

The confusion is understandable. Headlines suggest ESG is retreating: impact fund fundraising dropped from $383 billion in 2022 to $163 billion in 2024. Political pressures in the United States have driven some institutions to distance themselves from ESG terminology. Yet beneath the surface, the integration of environmental, social, and governance factors into investment processes continues—just with different language. "Responsible investing," "stewardship," and "sustainability" have replaced "ESG" in many institutional vocabularies, but the underlying data requirements haven't changed.

The EDCI Framework: What You Need to Report by April 30, 2025

The ESG Data Convergence Initiative has become the de facto standard for private market ESG reporting, with major institutional LPs requiring EDCI-formatted data from their GP relationships. The April 30, 2025 deadline for 2024 data submission creates immediate compliance obligations for participating managers.

Key EDCI metrics for 2025 include:

• Greenhouse gas emissions: Scope 1 (direct emissions), Scope 2 (indirect from energy), and optionally Scope 3 (value chain emissions)
• Net zero strategy and targets: Whether portfolio companies have committed to net zero goals and established interim targets
• Renewable energy: Percentage of energy consumed from renewable sources
• Board diversity: Percentage of women on portfolio company boards
• C-suite diversity: Percentage of women in executive leadership positions
• Work-related injuries: Safety metrics including injury rates and lost-time incidents
• Employee engagement: Survey data on workforce satisfaction and retention

The challenge for fund managers lies in data collection from portfolio companies. Unlike public companies with established ESG reporting infrastructure, private companies often lack systems for tracking and reporting these metrics. Managers must either work with portfolio companies to implement data collection or estimate values using industry benchmarks—which creates audit risk and LP scrutiny.

European Regulatory Requirements: SFDR and the Article 8/9 Distinction

European fund managers face additional ESG disclosure requirements under the Sustainable Finance Disclosure Regulation (SFDR). While the U.S. regulatory environment moves toward ESG deregulation, Europe remains firmly committed to sustainability-related disclosure rules.

Article 6 funds don't promote environmental or social characteristics or have sustainable investment objectives. They must still disclose how sustainability risks are integrated into investment decisions—or explain why sustainability risks aren't considered relevant.

Article 8 funds ("light green") promote environmental or social characteristics. They must disclose pre-contractual information about how characteristics are met, periodic reports on characteristic attainment, and website disclosures with methodology details.

Article 9 funds ("dark green") have sustainable investment as their objective. They face the most extensive disclosure requirements, including detailed impact reporting, principal adverse impact indicators, and "do no significant harm" assessments.

The Institutional LP Perspective: What They Actually Want

Most institutional investors have moved from standalone ESG strategies to integration into overall investment processes. They're not seeking dedicated ESG funds as much as they're expecting ESG consideration across all fund investments.

The data requests have become standardized around ILPA and EDCI frameworks. LPs increasingly want data in consistent formats that enable portfolio-level aggregation. A pension fund with 50 GP relationships wants to report aggregate portfolio carbon emissions to its board—which requires comparable data from each GP.

Performance evidence supports continued integration. According to Morgan Stanley's 2024 Sustainable Reality report, sustainable funds achieved a median return of 1.7% in H1 2024 compared to 1.1% for traditional funds. EY-Parthenon research found that PE funds with stronger ESG ratings achieved IRRs up to 7.8 percentage points higher than lower-rated peers.

Building ESG Data Infrastructure

Portfolio company assessment establishes baseline capabilities. Survey each portfolio company on what ESG data they currently track, what systems they use, and what gaps exist relative to EDCI and SFDR requirements.

Standardized collection processes ensure consistency across the portfolio. Rather than ad hoc data requests, implement annual or quarterly collection cycles with standardized templates.

Technology platforms streamline collection and aggregation. Manual spreadsheet-based processes create errors, delays, and scalability problems as portfolios grow.

Estimation methodologies fill gaps when company-level data isn't available. Industry benchmarks, revenue-based proxies, and modeled estimates can substitute for direct measurement—but only with clear disclosure of methodology.

Navigating the ESG Terminology Minefield

The political polarization around ESG creates communication challenges for fund managers serving diverse LP bases. European pension funds may require explicit ESG integration while certain U.S. state pensions face political pressure to avoid ESG language.

Reframing as risk management often satisfies both camps. Rather than leading with ESG terminology, describe environmental analysis as "physical and transition risk assessment," social factors as "human capital management," and governance as "board effectiveness."

Regulatory compliance as baseline depoliticizes the conversation. Framing ESG reporting as "meeting regulatory requirements in jurisdictions where we operate" makes ESG a practical necessity rather than a values statement.

How Polibit Supports ESG Reporting Requirements

Investor Portal with Document Management: Distribute ESG reports, SFDR disclosures, and EDCI data through the white-label investor portal. LPs access all required documentation in one place.

Multi-Fund and Multi-Jurisdiction Support: For managers with Article 8 or Article 9 funds alongside conventional vehicles, Polibit's multi-fund architecture maintains appropriate disclosure separation while providing consolidated views for management reporting.

Compliance Validation Infrastructure: ESG compliance validation builds on the same infrastructure supporting KYC/AML. The platform's systematic approach to compliance documentation extends to ESG-related certifications and attestations.

Sources

• PitchBook ESG Survey 2024
• EDCI (ESG Data Convergence Initiative) 2025 Metrics Guidance
• Morgan Stanley Sustainable Reality Report 2024
• EY-Parthenon PE ESG Performance Study
• ESMA SFDR Guidelines and Fund Naming Rules