How to gather emissions data from portfolio companies?

Private equity firms face growing pressure to track and reduce emissions across their portfolio companies. Here’s why it matters and how to do it effectively:

• Investor Expectations: 80% of global investors prioritise emissions data in investment decisions.

• Regulatory Compliance: Laws like the CSRD and CCDAA demand detailed emissions reporting.

• Current Challenges: Only 30% of portfolio companies track emissions, and spreadsheet-based tracking is prone to errors (30-40% error rate).

• Business Benefits: 70% of private equity leaders believe decarbonised companies have higher valuations at exit.

Solution: Switch to centralised emissions tracking platforms. These tools automate data collection, ensure compliance, and improve data quality with features like real-time updates, GHG Protocol-compliant formulas, and AI-powered error detection.

Key Steps:

1. Assess current emissions tracking methods.

2. Choose a platform with API integrations and compliance tools.

3. Migrate data, train teams, and automate reporting.

A centralised system not only simplifies compliance but also helps private equity firms align with investor expectations and achieve better business outcomes.

How to Manage & Track the Carbon Footprint of your Portfolio

Current Problems with Spreadsheet-Based Tracking

Using spreadsheets for emissions tracking presents several challenges, highlighting the need for a centralised solution. A Boston Consulting survey found that executives estimate a 30–40% error rate in their carbon footprint calculations when relying on spreadsheets ^[2]. Below, we break down the key issues, from manual errors to inconsistent reporting.

Manual Data Entry Errors

Spreadsheets rely heavily on manual input, which increases the risk of mistakes. Common errors include:

• Misplaced decimals in consumption data

• Incorrect unit conversions

• Formula errors

• Transcription mistakes from source documents

"Despite the fact that most organisations are committed to digital transformation, there is a reluctance to making technology decisions that move away from legacy processes. As a result, many businesses are still using manual spreadsheets and methods to fulfil immediate reporting requirements. This process is very error prone, slow, costly and can expose the businesses to significant risk." – John Vagenas, Managing Director and industry specialist, Industrial Sustainability Solutions ^[1]

Scattered Data Sources

Tracking emissions often involves pulling data from multiple, uncoordinated sources, which complicates reporting. For example, businesses may need to track:

• Electricity consumption from utility bills

• Natural gas usage

• Water consumption figures

• Waste management records

These data streams are often delivered at different times and in varying formats, making it tough to consolidate them accurately. A study of oil and gas companies' emissions reports from 2010 to 2019 found that 38.9% of reports failed basic consistency checks due to data quality problems ^[4]. Additionally, 80% of manufacturers report lacking reliable carbon data ^[3].

Mixed Reporting Methods

Different reporting practices across portfolio companies create compliance challenges. Research shows that up to 90% of spreadsheets contain errors ^[5], making it harder to meet regulatory and stakeholder expectations. While initiatives like the Initiative Climat International (iCI) offer standardised greenhouse gas accounting methods for private equity firms ^[6], implementing these standards without digital tools is a major hurdle. Companies often use:

• Different calculation methods

• Varying emission factors

• Inconsistent reporting periods

• Diverse data categorization systems

These inconsistencies make it difficult to maintain accurate and comparable emissions data across a portfolio. A centralized platform could help address these issues by streamlining data collection, standardizing methods, and improving accuracy.

Single Platform Advantages

Switching to a unified emissions tracking platform like Emerald Power can improve both data accuracy and retrieval efficiency.

Faster Data Collection

Automated systems simplify emissions reporting. Here's how different data sources are collected and their benefits:

This streamlined approach cuts down collection time and ensures standardised reporting. A great example is Microsoft's use of automated systems for quarterly emissions reviews in 2023. These systems identified and corrected a 5% error in Scope 2 emissions calculations by early Q3, avoiding potential reporting issues ^[7].

Faster data collection also means better overall data quality.

Better Data Quality

High-quality data leads to smarter decisions. Emerald Power's platform offers features like:

• GHG Protocol-compliant formulas that stay updated with the latest standards

• AI-powered automation for data validation and error detection

• Smart alerts to catch inconsistencies before they affect reports

"Measuring your carbon footprint is an opportunity to take stock of how you're doing business", says Elizabeth Sheehan, Director of Climate Smart Strategic Engagement at Radicle ^[7].

Meeting Regulations

Emerald Power simplifies regulatory reporting with built-in compliance tools. Rich Goode highlights the importance of maintaining an up-to-date Inventory Management Plan (IMP) or similar documentation:

"It is vitally important that companies create – and keep up-to-date – a document called an Inventory Management Plan (IMP), standard operating procedure, manual, or accounting policy" ^[7].

The platform supports compliance through:

• Automated report generation aligned with GHG Protocol standards

• Real-time data validation for accurate reporting

• Customisable templates for specific regulations

• Multi-location compatibility for complex portfolios

• Advanced reporting tools to communicate with stakeholders

These features make it easier to meet regulatory requirements while saving time and effort.

Moving to a Single Platform

Switching to a centralised platform can simplify emissions tracking across portfolio companies. A recent study found that 86% of mid-market executives still rely on spreadsheets for carbon tracking, while only a third trust the quality of their data ^[8].

Review Current Methods

Start by assessing how your portfolio companies currently track emissions. Focus on these areas:

Pay special attention to companies that:

• Are approaching exits

• Face strict regulatory oversight

• Have high environmental expectations

• Represent significant investments

• Hold substantial industry influence

These insights will help you outline the requirements for a new platform.

Choose Your Software

To address current gaps, look for a platform that integrates data sources, ensures compliance, and provides real-time analytics.

• Integration Features: Platforms like Emerald Power can automate data collection by connecting directly to utility providers and accounting systems.

• Compliance Standards: Make sure the software adheres to GHG Protocol guidelines.

• Data Analysis Tools: Opt for platforms with features like:

  • Real-time monitoring

  • Customizable dashboards

  • Trend analysis

  • Automated validation checks

Once you've identified the right platform, it's time to implement it across your portfolio.

Set Up Companies

The setup process typically takes 15–20 days ^[9]. Here's how to get started:

1. Migrate data and integrate systems, including:

   • Utility accounts

   • Financial systems

   • IoT sensors

   • Enterprise resource planning (ERP) software

2. Train teams on tasks like data input, report generation, quality control, and compliance management.

"Green Project's comprehensive audit trail and audit partner network allowed us to easily submit and certify GHG reports for our LPs with the same level of rigor that we bring to financial accounting." - VP, Investor Relations, Private Equity Firm ^[9]

If your companies primarily deal with supply chain emissions, consider working with service providers who specialize in Scope 3 expertise ^[6].

Setting Up Automatic Data Systems

Automating data collection is key to accurate emissions tracking. Right now, only 9% of organizations track their total emissions with precision ^[8].

Connect Your Systems

To streamline emissions tracking, integrate your business systems with a centralized platform. Tools like Emerald Power provide API and data connector options for seamless integration.

Here’s a breakdown of integration methods based on system type:

Platforms like ClimatePartner offer APIs tailored to specific industries, making it easier to automate and reduce manual data entry ^[10].

Steps for successful integration:

• Pinpoint the data points linked to emissions.

• Verify API compatibility.

• Set up secure API connections.

• Test data flows to ensure accuracy.

Once your systems are connected, you can shift your focus to setting up regular reporting for ongoing insights.

Schedule Regular Reports

Automated reporting simplifies data collection and provides timely insights. Brightest’s platform, for example, turns scattered data into actionable insights ^[11].

"With a RESTful API, flexible data connectors, document import tools, audit controls, and an auto-generated report-builder, Brightest saves teams valuable time and ensures accurate reporting" ^[11].

Set up automated reporting to:

• Flag unusual emissions patterns.

• Validate data quality automatically.

• Archive reports for audits.

• Share updates with all stakeholders.

Make sure your automated systems align with your sustainability objectives and keep pace with changing regulations ^[12].

Next Steps

Consider using a centralized platform to track emissions and improve efficiency. Data indicates that portfolio companies' emissions are more than 700 times higher than Scope 1-2 operational emissions ^[14].

Platforms like Emerald Power offer several advantages:

Experts back these benefits. A Head of Sustainability & ESG shared:

"Thank you for giving us such interesting and thoughtful insights into our emissions profile. The tool is very clear and easy to use! It's been such a pleasure to work with Point B." ^[14]

Tom Reichert, Global CEO of ERM, highlighted the importance of standardization:

"The application of this standard will enable a more consistent and streamlined approach to the calculation and disclosure of emissions, and will support private equity firms as they seek to understand and drive down emissions across their portfolios." ^[15]

To make the most of these insights, focus on these steps:

• Use APIs to automate data collection

• Standardise greenhouse gas (GHG) accounting across all portfolio companies

• Set up baseline measurements for emissions

• Configure alerts for detecting anomalies in emissions data

• Enable tracking across multiple locations

Improving emissions data quality isn’t just about compliance - it’s about positioning your business to succeed in a low-carbon economy ^[13].