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SBTi, PE Firms Issue Net Zero Guidance

A group of private equity firms have joined with SBTi and others to push for alignment with Paris 2030 targets.

Several private equity firms (PE) have combined with industry bodies to develop guidance on setting science-based targets to help the industry achieve net zero goals.

The guidance was developed by members of the Initiative Climat International (iCI) and the Science Based Targets initiative (SBTi), alongside multiple PE firms and in partnership with the Laudes Foundation. “This guidance will help to create greater transparency and consistency in the way the sector transitions its portfolio to net-zero,” said the statement on the launch.

The guidance focuses on providing target setting requirements on PE direct investments in buyout, growth, and venture capital strategies, says the group’s statement, to ensure PE firms collectively address this most material asset class and accelerate greenhouse gas (GHG) emissions calculation.

PE firms involved as project funders include Bregal Investments, FSN Capital, Hg Capital, Intermediate Capital Group, Investindustrial, PAI Partners Permira Advisers, Tower Brook Foundation, and Triton Partners.

Two weeks ago, SBTi also launched the world’s first science-based certification of companies’ net-zero targets, which aims to ensure that individual corporates are on track to align their near and long term climate action with the 1.5°C of global warming promised by signatories of the Paris Agreement.

In August, the SBTi launchedpublic consultation to help PE firms take a science-based approach to reducing GHG emissions, which closed in September. The draft guidance outlined best practice in SBT setting, providing methods, criteria, guidance, and tools to reduce the barriers to implementation.

The iCI is a France-based PE initiative and global collaboration between 119 PE investors that have collectively committed to reduce their portfolio emissions and to secure sustainable investment performance. The iCI is officially endorsed by the Principles for Responsible Investment (PRI) and hosted on the PRI online Collaboration Platform.

For the development of the PE guidance, the SBTi formed an Expert Advisory Group, a group of volunteer advisors from the private equity industry, academia, consultancies, non-profit and multilateral organizations with in-depth knowledge of science-based target setting for the private equity industry.

Bregal Investments said it had set its own science-based targets in line with a 1.5°C pathway. The Switzerland-headquartered firm committed to halving direct emissions by 2030, also pledging that 40% of its portfolio companies will have set science-based by 2025, and 100% will have set targets by 2030.

“Private equity is uniquely positioned to drive change through its active ownership approach and ability to deploy capital,” said Steven Black and Quentin Van Doosselaere, Co-CEOs, Bregal Investments in the statement. “We encourage the private equity community to engage with the guidance and set their own climate targets.”

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