Preqin ESG Solutions 30 Hence, at this point, it is only applicable to private equity, private debt, and venture capital. ESG Risk Exposure scores were designed to be compared across portfolio companies, portfolios, and fund manager 昀椀rms. As a result, a level of a score cannot be used to measure absolute risk. The fundamental risk exposure we attribute to portfolio companies is the risk inherent to a given industry. This is then modi昀椀ed according to the country in which their headquarters are located. Hence any two companies operating in the same industry and geography will inevitably have the same ESG risk exposure score. This does not mean we believe two IT companies based in the US are necessarily identically risky from the perspective of ESG. However, for any IT company, the key risks stem from Customer Privacy violation, Data Security breaches or 昀椀erce Competitive Behavior of other market participants. All these risks are more likely to materialize as costs in the US, where a company can be sued in a class action or over an infringement of intellectual property rights. For a full list of data sources for our industry and geography models, please see Appendix C. Identi昀椀cation To identify the sources of material industry risk we leveraged well-established standards, provided by the Sustainability and attribution Accounting Standards Board (SASB). SASB pillars and factors of ESG risk underpin our broad categories (and subcategories) from which ESG risk originates. To measure the magnitude of industry risk we relied on several Key Performance Indicators (KPIs), collected from various publicly available sources. These sources include non-governmental organizations, academic research, market regulators, international agencies, and the o昀케ces of national statistics. Tagging these KPIs to each of the SASB factors enabled us to have a common language covering both public and private market ESG risk assessments. The purpose of our SASB Risk Map functionality is to attribute the sources of industry risk. It provides us with baseline exposure pro昀椀les, which are the 昀椀rst step to building a full picture of ESG risk exposure in private markets. The baseline of risk exposure of any asset is determined by the industry in which it operates. The risk exposure of a fund is determined by the industries in which the underlying assets of that fund operate. Similarly, the risk exposure of a fund manager is based on the exposure of the funds in their portfolio. ↗ Back to Contents