Initiative Climat International launches “A Case for Net Zero in Private Equity”

The iCI is a global, practitioner-led community of over 200 private markets firms and investors representing over US$3.2 trillion in AUM that seek to better understand and manage the risks associated with climate change. iCI members commit to sharing knowledge, experience, and best practice, and collaborating through working groups to develop rich content and resources that will help standardise practices across the industry.

A Case for Net Zero in Private Equity was developed by the iCI Net-Zero Working Group in partnership with Indefi and support from the UN-supported Principles for Responsible Investment (PRI), CDP and Ceres; it is intended for private equity (PE) CEOs and managing partners. The paper is based on three drivers:

• Net zero is a demanding approach, which requires a comprehensive knowledge of external and internal factors influencing companies’ activities, as well as how these activities affect planetary boundaries;
• Achieving net zero is a continuous and iterative process;
• The net-zero trajectory is a leadership concern, directly implicating C-level executives in PE firms.

The purpose of the paper is to inform PE leadership of the challenges in reaching net zero as well as the importance of doing so. The paper is organised into three main sections that explain the private equity industry’s opportunity for making an impact, why acting is important and is a business imperative, and then provides a roadmap for iCI members on how to get started.

As with previous iCI publications such as, Greenhouse Gas Accounting and Reporting for the Private Equity Sector (Greenhouse Gas Accounting and Reporting for the Private Equity Sector | Article | PRI (unpri.org)), Private Equity Sector Science-Based Target Guidance (https://sciencebasedtargets.org/resources/files/SBTi-Private-Equity-Sector-Guidance.pdf), and TCFD Implementation Considerations for Private Equity (TCFD Implementation Considerations for Private Equity – October 2022 (bvca.co.uk)), this paper was developed in deep collaboration across multiple parties in the spirit of making an impact.

David Atkin, CEO, UN PRI

“A ratcheting up of ambition and action from the private markets - including private equity - on net zero commitments is increasingly important. iCI’s most recent paper provides valuable guidance and education to those managing private equity portfolios on how to approach and activate a net-zero strategy. In private equity – and across the investment chain – leadership’s role is critical in formulating these strategies and modelling approaches. Alongside iCI and other contributors to this paper, PRI looks forward to helping to support private equity’s net-zero ambitions.”

Co-Chairs of iCI Net-Zero Working Group (Alvar De Wolff, Bregal Investments; Josepha Montana, Turenne Capital; Serge Younes, Investindustrial)

“We are pleased with the release of this paper which is the second publication from the Net-Zero Working Group and is a nice complement to the previously released Private Equity Sector Science-Based Target Guidance. Our goal as a working group is to provide the PE industry and members of iCI with the necessary tools and best in class thinking to mobilise more firms on their path to net zero.”

Emmanuel Parmentier, Partner, Indefi

“Indefi is both proud and humbled by this project. Proud to have supported an ambitious and targeted net-zero approach, designed by and for Private Equity leaders. And humbled by the challenges still to be addressed in a closing time window. Authentic climate action calls for increasingly high targets and a demanding learning path. We intend to pursue our contribution to pivotal conversations in the domain and remain fully dedicated to supporting our clients throughout this transformative journey.”

Peter Ellsworth, Senior Director, Ceres

“Private equity has a critical role to play in helping the world reach net-zero emissions by 2050, yet few investors have set net-zero targets. This guide is a valuable and timely call to action for GPs which helps establish the business case for net zero and equips them with an actionable roadmap to measure and understand the key milestones of their commitment.”

Pratima Divgi, Head of Capital Markets, CDP North America

“As we rapidly approach the deadline for limiting global warming to 1.5 degrees Celsius, net zero must be our north star moving forward. To get there, immediate action at an unprecedented scale is required from all sectors of the global economy, including private equity. This paper provides necessary guidance to forward-thinking investors who know they must align with a net-zero future, and we’re proud to be a partner in its development.”

About iCI

iCI is a global, practitioner-led community of private markets firms and investors that seek to better understand and manage the risks associated with climate change.

iCI’s members share a commitment to reduce carbon emissions of private markets-backed companies and secure sustainable investment performance by recognising and incorporating the materiality of climate risk. In practice, this implies a commitment to effectively analyse and manage climate-related financial risk and greenhouse gas (GHG) emissions within their private markets portfolios, in line with the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). Members commit to sharing knowledge, experience, and best practice, working together to develop resources that will help standardise practices across the industry.

The iCI is formally endorsed by the Principles for Responsible Investment (PRI), is a Supporting Partner of The Investor Agenda, and enjoys fruitful partnerships with CDP and Ceres, and private equity and venture capital associations BVCA and France Invest.

About INDEFI

Indefi is a leading strategy advisor for the global investment management business. Established in 2007, Indefi helps asset managers shape their business strategies and build a sustainable competitive advantage. The firm’s expertise spans public and private markets, including infrastructure, private credit and equity, and real estate. A PRI signatory, INDEFI also advises asset managers in developing and implementing differentiated ESG and Sustainability strategies. For more information, please visit www.indefi.com.