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New Decarbonisation Tool for Private Markets

A Private Markets Decarbonisation Roadmap (PMDR) has been launched to provide private markets firms with a common language and approach with which to decarbonise their business models and portfolio companies. The new framework was developed by Initiative Climat International (iCI) and the Sustainable Markets Initiative’s Private Equity Task Force, with support from Bain & Company. To address challenges such as data scarcity and unclear pathways, the PMDR offers a “comprehensive communications approach” across asset classes, including buyout, infrastructure, private credit and secondaries. The partners said it would support “more effective analysis and objective-setting” by creating greater transparency on the current state of decarbonisation in a given investor’s portfolio. The PMDR includes an Alignment Scale, described as an industry-consistent approach and criteria “to classify portfolio companies along the decarbonisation trajectory”, with the intent to incentivise “real action”. The PMDR was developed via a large-scale collaboration and consultation process, including input from more than 250 general partners, limited partners and sustainability organisations globally. “Privately-owned companies lag public companies in disclosing and reducing emissions, leaving value on the table, given the opportunity for decarbonisation to enhance operational excellence, increase valuations and mitigate risks. This new roadmap provides an agenda-setting opportunity for the private equity industry,” said Marc Lino, a Partner at Bain & Company. iCI has more than 250 member firms with collectively US$4.3 trillion AUM and is endorsed by the UN Principles for Responsible Investment. Launched in 2021, the Sustainable Markets Initiative’s Private Equity Task Force launched is a CEO-level private equity working group established to discuss ways that the industry can effect change.

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