EDCI and SFDR 2.0: what PE firms will need from their portfolio companies' carbon data

EDCI still treats Scope 3 as optional, and SFDR 2.0 looks set to keep principal adverse impact disclosure for its new fund categories. Neither lets a fund manager off the hook, because LPs keep asking what sits behind every portfolio company number.

This article settles what PE firms will actually need from portfolio companies over the next two reporting cycles, and why a spreadsheet sent to every finance team once a year stops working.

01 - WHAT CHANGED THIS MONTH

What SFDR 2.0 changes for PE firms, and what it keeps

The European Parliament adopted its negotiating mandate on SFDR 2.0 on 5 October 2026. The Council set its own on 24 June 2026. According to Arthur Cox (16 October 2026), the first trilogue between Parliament, Council and Commission is expected on 22 October 2026.

The headline change is structural. Articles 8 and 9 give way to three voluntary product categories, among them Transition and Sustainable, each with a 70% minimum investment threshold.

For carbon data, the detail that matters is principal adverse impacts. Goodwin (15 October 2026) notes that the Commission would drop the entity-level PAI statement and proposed voluntary product-level indicators. The Council and Parliament both want PAI disclosure kept as mandatory for Transition and Sustainable products. Parliament's text extends it to all three categories.

So the question is not whether PAI survives. It is which funds carry it, and how hard the numbers behind it will be looked at.

Two caveats, truth first. Both institutions support an opt-out from categorisation for alternative investment funds marketed only to per se professional investors, which could cover many PE vehicles. And nothing is final: on current timelines the new regime would apply from late 2028 or around 1 January 2029.

Meanwhile today's rules still apply. The first SFDR PAI indicators in Delegated Regulation (EU) 2022/1288 are GHG emissions across Scope 1, 2 and 3, carbon footprint and GHG intensity of investee companies. Those are financed emissions, and they are built from portfolio company inventories.

02 - WHAT EDCI ASKS

What EDCI asks portfolio companies for in 2026 and 2027

EDCI is where most of this data actually travels. Scope 1 and 2 are core metrics. Scope 3 is non-core: welcome, not required.

The 2026 guidance added one small question with large consequences, as Novata summarised in November 2025: an optional yes or no on whether Scope 3 is 40% or more of total emissions. EDCI's own 2027 reporting year guidance, published in October 2026, keeps that question and ties it to the decarbonisation metric. A Paris-aligned target must include Scope 3 once that 40% line is crossed.

The guidance also adds a note on SBTi. Version 2.0 of the Corporate Net-Zero Standard was published in June 2026 and becomes mandatory for new targets from 2028. For the 2027 reporting year, EDCI keeps referencing the 40% threshold.

A few rules decide whether a submission holds up. EDCI will not accept top-down estimates. Spend-based methods are accepted, but companies are encouraged to move towards activity-based data. Figures cover 100% of the company, with ownership in a separate field.

And LPs are building their own maths on top. In the 2027 changes, enterprise value and current value of investment move from the SFDR tab into the main data tab, so LPs can calculate financed emissions themselves. Submissions are due 30 April, so 2026 data lands by 30 April 2027.

03 - THE 40% QUESTION

Why the Scope 3 question is the one to prepare for

Here is the catch. You cannot answer a yes or no on the Scope 3 share without having calculated Scope 3.

In practice the answer is almost always yes. In the inventories below, Scope 3 came out at 99% of a PE firm's own baseline and above 80% for a portfolio hospitality chain. A portfolio that reports only Scope 1 and 2 is reporting the smallest part of its footprint.

That matters twice. Once for targets, because a Paris-aligned target without material Scope 3 is an answer the guidance does not support. Once for SFDR PAI, where Scope 3 already sits in the first indicator. More on how method choices affect targets in our piece on activity-based data and SBTi targets.

04 - WHAT FUNDS NEED

What PE firms will need from portfolio company carbon data

Strip away the acronyms and the list is short.

One method across the portfolio. Forty companies, forty consultants and forty spreadsheets do not add up to a portfolio figure anyone can compare year on year.

Scope 3 calculated, not guessed. The 40% question and the first PAI indicator both depend on it.

A trail back to the source. When an assurer samples a number, under limited or later reasonable assurance, someone has to open the invoice and the factor behind it. See what auditors ask under limited assurance.

Acquisitions handled cleanly. Add-ons should enter the inventory from their acquisition date, not as a restated guess at year end.

Low load on the portfolio company. The binding constraint is a finance team that already closes the books, not one more questionnaire to fill in.

Numbers ready before 30 April. EDCI itself expects some funds to miss emissions data at the deadline and suggests a second submission. Better not to need it.

05 - WHAT IT LOOKS LIKE

Four portfolio inventories built from data the companies already had

These are anonymised Bardo projects. The pattern is the same in each: exports from systems that already exist, rebuilt into activity, with every figure traceable.

A leading Nordic PE firm. Around 12,000 invoices and receipts across 9 entities in 8 jurisdictions became around 27,000 activities from about 1,700 suppliers. Only about 15% of roughly €190M in flows was emission-driving spend. The result was a baseline of about 1,200 tCO2e for SBTi, 99% of it Scope 3, with the methodology auditor-reviewed and third-party pre-assured. It was then piloted with three portfolio companies.

A portfolio company, a Nordic hospitality chain. Around 50,000 invoices became about 260,000 activities covering roughly €68M in spend, with more than 80% in Scope 3. "It felt like a new world," said their sustainability lead.

A PE-backed home-services platform. 55 legal entities in Sweden and the UK. About 1 to 3 hours per company for one ERP export. Acquisitions included from their acquisition date. The result was a complete Scope 1 to 3 inventory in the audited annual report, with nearly half of the data in the top quality grade.

A Nordic industrial group. 43 companies on 14 ERPs and €300M in external spend, delivered in about two months. Scope 1 came in at about three times what manual reporting had shown, and a single plastics supplier drove more than 10% of group emissions.

A number that moves threefold is not a rounding question. It changes the conversation about where value creation and reductions should start.

06 - HOW BARDO FITS

How Bardo builds portfolio carbon data for EDCI and SFDR PAI

Bardo is managed software. Each portfolio company sends an ERP or invoice export it already has. Bardo reads the invoice lines, rebuilds the activity behind them and matches emission factors to that activity, using spend-based factors only as a documented fallback.

Out of that comes an auditable, invoice-level Scope 1, 2 and 3 inventory per company, consistent across the portfolio. The figures drop straight into the EDCI template and the PAI calculation, and every total opens to the line behind it. It is not a DIY AI tool your team has to prompt and check. For how this works when suppliers stay silent, read what to do when suppliers won't share emissions data.

Not sure which method your portfolio companies use today? Our explainer on spend-based vs activity-based carbon accounting is a good place to start.

07 - FAQ

Frequently Asked Questions

1. Is Scope 3 mandatory for EDCI?

No. Scope 3 is a non-core metric. Since the 2026 guidance there is also an optional yes or no question on whether Scope 3 is 40% or more of total emissions, which EDCI's 2027 guidance keeps. If it is, a Paris-aligned target must include Scope 3. Answering the question honestly requires calculating Scope 3 anyway.

2. Does SFDR 2.0 remove PAI disclosure?

Partly. The Commission proposed removing the entity-level PAI statement. At product level, the Council and Parliament both want PAI disclosure mandatory for Transition and Sustainable products, and Parliament would extend it to all three categories. The final text depends on the trilogues that start in October 2026. Goodwin has a clear summary.

3. When will SFDR 2.0 apply?

Not before late 2028. Both Parliament and Council support a 24-month application period, so if the regulation is adopted around the turn of 2026 and 2027, application would come in late 2028 or around 1 January 2029. Until then, the current SFDR rules and PAI indicators apply.

4. What are financed emissions in private equity?

The share of a portfolio company's emissions attributed to the fund, usually the value of the investment divided by the company's enterprise value, multiplied by the company's Scope 1, 2 and 3 emissions. The fund does the attribution. The portfolio company has to supply an inventory that holds up.

5. Can spend-based data be used for EDCI?

Yes. EDCI accepts spend-based methods but rejects top-down estimates, and encourages a move towards activity-based data. Activity-based figures built from invoice lines also make it easier to show progress against a target, because they move with what was bought rather than with prices.