For decades, private market investors have relied on upfront due diligence as the primary moment to assess ESG, reputational, and operational risk. The logic was straightforward: conduct a thorough review at acquisition, document the risks, and manage the asset from there. That model is now under increasing strain. Not because due diligence is no longer important, but because the environment in which private investments operate has changed fundamentally.
This shift was a central theme of a recent 2026 webinar on private markets featuring Benjamin Krusche, Strategy Director at Clarity AI, and Sylvain Forté, CEO at SESAMm. Both speakers emphasized that one-off ESG due diligence no longer reflects how risk actually emerges over the life of an investment, and why continuous monitoring is becoming essential.
Due Diligence Hasn’t Disappeared - The World Around It Has Changed
Upfront due diligence has always been a cornerstone of private market investing, and it remains essential. What has changed is not the role of diligence itself, but the assumptions that once made a point-in-time assessment sufficient.
Historically, many ESG and reputational risks were relatively static. If an asset appeared clean at entry in terms of governance, compliance, or industry exposure, it often remained so long enough to exit. ESG due diligence, in that context, was largely about establishing a baseline. Today, risk behaves differently.
A recurring theme throughout the webinar was that some of the most material ESG and reputational risks can emerge after acquisition rather than at deal close, especially as holding period durations increase. These risks surface through litigation, regulatory enforcement actions, labor and human rights incidents, or reputational controversies. Signals that rarely align neatly with due diligence checklists.
In private markets, where disclosure remains fragmented, the absence of information at entry does not imply the absence of risk. It simply delays visibility. That said, continuous monitoring is not a complete solution to this opacity. Many private portfolio companies, particularly mid-market industrials, have minimal media footprints and limited public disclosure. Monitoring signals that do not exist produces no insight. Effective coverage, therefore, requires triangulating across multiple data sources, including direct company engagement.
Risk Is No Longer Static - It Is Event-Driven and Fast-Moving
Many of today’s ESG and reputational risks are triggered externally and unfold quickly, often outside management’s direct control. While management-provided information remains important, it is no longer sufficient on its own.
Today, many material risk signals emerge from:
- Media reporting
- Regulatory actions
- NGO investigations
- Court proceedings
- Employee and labor disputes
These signals often appear well before issues are formally disclosed, if they are disclosed at all. As a result, relying solely on point-in-time information captured at acquisition creates blind spots that widen over time.
Longer Holding Periods Increase the Cost of Being Late
Longer holding periods amplify these challenges. Issues that were immaterial (or invisible) at acquisition can surface years later, well beyond the scope of an initial due diligence exercise. When that happens late in the holding period, the consequences can be significant: delayed exits, repricing, or friction during refinancing. But the pressure is also coming from the other direction. Large institutional LPs are increasingly embedding ongoing ESG reporting and monitoring requirements directly into side letters and limited partnership agreements, making continuous visibility not just prudent risk management but a contractual obligation for many GPs.
As SESAMm CEO Sylvain Forté explained during the webinar, “As companies tend to be held in portfolios for a longer period of time, that need for information has increased. Oftentimes, there was a perspective that for direct investment, deal teams would provide sufficient information and management would provide sufficient information on portfolios. But as the timescale is expanding and expanding, and the duration of these investments continues to grow, we see that this has been a real change in terms of making sure that there are no emerging operational risks that would not have been captured at the diligence stage, emerging governance risk, litigation, and reputational risk exposure.”
Scale Has Changed the Equation
This challenge is compounded by scale. Private market portfolios today are larger, more global, and more heterogeneous than in the past. Secondaries transactions make this particularly visible: investors may need to assess and monitor hundreds of assets under tight timelines, often with limited access to underlying companies, making point-in-time ESG assessments particularly fragile and extremely time-consuming in inherited portfolios.
Manual, human-led monitoring processes that once worked no longer scale. The issue is not a lack of expertise; it is a lack of continuous, consistent visibility across portfolios.
From Static ESG Snapshots to Continuous Risk Visibility
What is replacing point-in-time ESG due diligence is not simply “more data,” but a different operating model.
ESG information is increasingly integrated into investment decision-making as a continuous input rather than a one-off compliance step. Benjamin Krusche, Strategy Director at Clarity AI, described this shift clearly: “The classical point-in-time due diligence really is breaking down, and what people are moving towards is a much more continuous updating of the initial thesis, a continuous monitoring of this risk as well.”
Continuous monitoring allows investors to track emerging issues across portfolios, reassess risk as conditions change, and compare exposures consistently over time, something static due diligence packs were never designed to do.
Why This Shift Matters Now
The move away from point-in-time ESG due diligence reflects a convergence of structural forces:
- Faster-moving, event-driven risk
- Greater reliance on external signals
- Longer holding periods
- Larger and more complex portfolios
Taken together, these forces fundamentally change the role ESG due diligence can play in private markets. It is no longer just a gate at entry but an ongoing input into investment and risk decisions.
As Benjamin Krusche commented, by the end of 2026, “the idea that you conduct due diligence once at acquisition and treat it as a finished product will look very outdated. The market is moving toward continuous, fluid monitoring of risk - not a one-off assessment that sits untouched in a data room until exit.”
For private market investors, the implication is not to abandon due diligence, but to recognize its limits, and to complement it with continuous, portfolio-level risk visibility that reflects how risk actually behaves today.
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