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<v ->Hello, and greetings from New York.</v>

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I'm here today with Meg Starr,

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who's the Global Head of Impact at the Carlyle Group.

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And we're meeting one year on

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from the formation of the ESG Data Convergence Initiative.

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Meg, it's fantastic to be in conversation today.

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And it's exciting to see the private equity industry

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converge around these meaningful ESG metrics

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and generate comparable, useful, performance-based ESG data

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for the private markets.

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How's the inaugural year been for you?

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<v ->Honestly, the inaugural year has surpassed, I think,</v>

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our wildest dreams when we set out to work on this problem.

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And so we're now a community of more than 215 GPs

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and LPs globally who have come together

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to work on this initiative.

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I think what's most important

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is that this was built by and for the industry.

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And I think that's why it has staying power

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and that's why it has grown so rapidly.

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<v ->We've been crunching the data,</v>

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developing it into a benchmark, which we've shared back

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with all participating GPs and LPs in the Initiative.

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I don't think any of us imagined

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that we would be in a place where we've got 100 GPs

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that have been collecting and sharing data

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from 2,000 portfolio companies,

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I think 22,500 ESG data points.

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I think this is unprecedented

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in terms of ESG data in the private markets.

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<v ->That was a crazy idea we set out to work on.</v>

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We have benchmarking in public markets for ESG data,

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but we've never had a benchmark

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in private market data before.

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One of the most exciting data points that came out,

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even in this first year of data which is more preliminary,

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was around job creation.

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I think a popular narrative around private equity

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as an asset class is that private equity investors come in

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and they make money by stripping out companies.

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And frequently that can have negative impacts on jobs,

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or so the narrative goes.

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And what we found in the data, of these 2,000 private

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companies, is actually, it's quite the reverse.

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When you normalize for headcount,

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private equity companies create jobs

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at almost two to three times the rate

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of public market peers.

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<v ->I think we also found it interesting to see,</v>

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for the first time in the data,

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that on average, private companies

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have been lagging their public peers

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on things like renewable energy usage,

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board diversity, other metrics.

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The initial data that we have shows

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that private equity funds can be very powerful

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in driving change within their portfolio companies.

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I think if we looked at renewable energy,

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in just a couple of years,

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you've seen some really, really stark improvements

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in renewable energy usage,

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where you have been tracking data.

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And that for me just speaks to the power

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of the private equity investment model.

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You have often ownership control positions.

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You have a long term mindset,

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you can focus in on what matters and drive change.

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<v ->Yeah, and I think that's important, Ben,</v>

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because this isn't intended to sugarcoat private equity.

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And we want to be clear about the areas

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where a performance doesn't match up to public markets.

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But I think your point is an important one,

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where it's not necessarily

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about the maturity of private companies

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when we invest in them.

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It's what we can do over our hold period.

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And so I think understanding where we might be lagging

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on things like board diversity, A, that's an opportunity

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for private equity GPs to really differentiate themselves

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by excelling ahead of the pack.

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But B, it's a real area of potential improvement

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when there's that much of a delta to be had.

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And so I think it's important to show

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where private equity is excelling, where it's not,

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but importantly, what change is possible over a hold period.

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<v ->And this benchmark's going to be a really important tool</v>

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in the toolbox for GPs.

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As they're engaging with their portfolio companies,

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how can you be kind of helping those management teams

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to drive change?

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<v ->One of the best tools we have is peer-set comparisons.</v>

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And when we work with management teams

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of our private companies,

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one of the best ways to incentivize action

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is to show them how they stack up to peers.

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And before, we didn't have a relevant

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private market data set.

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We had some public market comps,

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so you could try to cobble together some context-setting,

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but now, being able to show a management team,

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look, you're behind the industry on XYZ,

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or you're behind your relevant peer set,

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it's one of the best carrots we have to be driving change.

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<v ->What's next for the Initiative in 2023?</v>

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<v ->Well, I'm very excited about what's next.</v>

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We set up the Initiative to continue to be governed

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and led by GPs and LPs.

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And the intention is we do a sprint process every year

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after data collection is closed.

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We want to understand what we learned, what went well,

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what we might need to change, but more importantly,

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are there one or two metrics that we could all agree

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to add to our data collection for the next year?

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So we can incrementally

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and carefully build out a more robust data set.

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So we just completed the sprint

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for this first inaugural year,

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and we decided to add an additional metric on diversity.

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We'd started with board diversity,

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and we decided to add a metric

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around gender diversity at the C-suite.

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There's also a lot of energy for future years

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around metrics such as net-zero alignment.

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So a lot of interesting topics

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for the group to explore potentially adding,

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but we want to make sure that we are doing it

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in a way that enables GPs

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to continue collecting robust data.