Six Private Equity Firms representing €133 bn AUM combat climate change with ambitious science based targets

8th Nov 2021

  • With the launch of the first tailored guidance, targets to be approved and validated by the Science Based Targets initiative (SBTi)

  • Global firms are transforming investment engagement strategies to become aligned with the Paris Agreement

(Nov 8, 2021) Financial institutions play a critical role in decarbonizing the economy and driving sustainable practices. To enable a wide adoption of science-based targets by private equity investors, the Science Based Target initiative (SBTi) has released a tailored guidance, written in partnership with Anthesis and supported by the UN PRI and signatories of Initiative Climat International (ICi), to drive much needed near-term action. The new guidance is tailored to the unique business models and asset classes of private equity firms to align their investment portfolios and operations to well-below 2°C and 1.5°C climate scenarios.

Alberto Carrillo Pineda, Managing Director and Co-founder of the SBTi, commented: “The urgency to make significant change, quickly, has only increased in this last year. Since the latest IPCC report, we know there is an immediate urgency to shift to more sustainable practices as soon as possible - especially in the financial sector. A tailored guidance for private equity firms helps achieve these goals by enabling efficiency and accelerating the process for investors to establish science-based targets. It is a massive success within the sustainable finance sector and will drive change at the pace we need.”

Six private equity firms to have their 1.5°C science-based targets validated are Astorg (€16bn), Bregal Investments (€12bn), FSN Capital (€3.1bn), Hg (€35bn), Intermediate Capital Group (ICG) (€56.2bn) and Investindustrial (€11bn) have already proven the effectiveness of the guidance by setting approved and validated targets aligned with 1.5°C. Altor Equity Partners, Eurazeo, Montagu Private Equity, Tikehau Capital and Triton Partners also committed to have their SBTi targets approved within two years.

These firms are leading the decarbonization effort within the sector by shifting their engagement strategies to prioritize sustainability and low-emissions practices. The guidance was developed in consultation with leading sector experts, NGOs and PE firms representing a total assets under management of more than a trillion euros.

The guidance identifies challenges private equity firms commonly face to develop and achieve targets, and provides recommendations to overcome these common barriers, taking regional differences into consideration. Its release intends to raise the ambition of the private equity industry by defining and promoting best practice in science-based target setting and providing methods, criteria, guidance and tools to reduce the barriers to adoption and implementation.

For the development of this 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. The EAG serves in a technical advisory capacity for the SBTi private equity sector project and provides requested input and advice to priority topics and decisions.

Private equity firms are encouraged to use the guidance to set emissions reductions targets across their operations and portfolio company engagement targets aligned with the goals of the Paris Agreement. In addition, the SBTi is developing a Net-Zero Standard for Financial Institutions that is expected to be released in 2022 to help the sector standardize and drive financial climate action.

Fiona Reynolds, CEO, Principles for Responsible Investment, commented: “This guidance allows private equity firms to align their activity with best practice across the wider investment industry and to move towards decarbonisation of the real economy – and therefore real, impactful action on the climate crisis. We urge private equity firms to engage with the guidance and where possible, encourage them to adopt the portfolio coverage method for control investments, which is designed to deliver the most comprehensive alignment on net zero across a firm’s portfolio of companies. We are grateful for the input from members of the PRI-supported initiative Climat International (iCI) in delivering this guidance.”

Tim Clare, Director for ESG Advisory Services, Anthesis, commented: “We are proud to support the SBTi to develop this crucial private equity guidance. Through private equity investors' direct involvement and influence with so many private businesses, they are uniquely positioned to activate significant GHG reductions in the real economy. Private equity firms that align to this SBT PE Guidance will help drive the market shift needed to transition the sector towards a low carbon economy. It has been pleasing to collaborate with the SBTi and many leading private equity firms who understand this and see science-based GHG reductions as crucial to the long-term resilience of their investments.”

Thierry Timsit, CEO and Managing Partner of Astorg, commented: “We strongly endorse this collaborative initiative by iCi and SBTi as we believe simple, measurable and standardized objectives will go a long way towards managing change. We are delighted to be amongst the first private equity firms to set science-based targets for their investments. This reflects our ambition to lead on climate action and is fully consistent with the actions we have already undertaken to support our portfolio companies in our collective journey towards net-zero.”

Steven Black and Quentin Van Doosselaere, Co-CEOs of Bregal Investments, commented: “Private Equity is uniquely positioned to drive change through its active ownership approach and ability to deploy capital - supporting companies to transition their business to a net-zero future. Bregal is committed to this transition, as demonstrated by our leadership in the creation of this private equity guidance and through setting our own ambitious targets across all our funds in Europe and the U.S. We encourage the private equity community to engage with the guidance and set their own climate targets as a priority.”

Frode Strand Nielsen, Managing Partner and Founder of FSN Capital, commented: “FSN Capital is proud to contribute to the development of the Science Based Target initiative’s new guidance for the private equity industry, as part of a community of investors and organizations working together toward a more sustainable future. This new guidance will enable even more private equity firms to commit to and implement ambitious targets to address climate change, for the benefit of both our investors and society at large.”

Matthew Brockman, Managing Partner at Hg, commented: “Hg is delighted to have worked together with the other members of the iCI, the SBTi and Anthesis to develop this guidance for the PE sector. It is setting the standard not only for PE firms that want to commit to credible carbon reduction targets, but also for the businesses we invest in. As a leading global software investor, we hope that this will have a positive impact and drive change in the sectors in which we invest.”

Benoît Durteste, CEO and CIO of Intermediate Capital Group (ICG), commented: “I am delighted that we are in the first group of alternative asset managers to commit to net zero, and that ICG is doing so with approved science-based targets covering 100% of our relevant investments. We have a longstanding focus on sustainable business and investment practices, and today’s announcement sets a clear roadmap for delivering on our ambition for the next decade and beyond.”

Andrea C. Bonomi, Chairman and Founder of Investindustrial, commented: “Today’s announcement is the result of a significant amount of collaboration bringing together private equity firms working towards tackling climate change; However, they reflect only the foundation for the hard work we must do in the years to come. A decarbonising economy represents both a tremendous challenge and opportunity for business, and our companies must be prepared for both.”

The EAG (Expert Advisory Group) consists of individuals from the following firms and organizations (see full list in the guidance);

Allianz Capital Partners, Altor, Anthos Fund & Asset Management, Astorg, Blackstone, Berkshire Partners, Bregal Investments, BSR, Coller Capital, CVC, Deloitte LLP, Ecoact, EMK Capital, EQT, FSN Capital Partners, Hg, ICG, InvestIndustrial , Leaders for Climate Action, LGT Capital Partners, PAI Partners, Permira, Principles for Responsible Investment , PwC, Schneider Electric, SUSI Partners, TowerBrook, Triton Partners, and Tufts University.

ENDS

Notes to editors

For more information, including interviews and comment, please contact:

  • Kylee Barton, Science Based Targets initiative

[email protected]

About the Science Based Targets initiative

The Science Based Targets initiative (SBTi) is a global body enabling businesses to set ambitious emissions reductions targets in line with the latest climate science. It is focused on accelerating companies across the world to halve emissions before 2030 and achieve net-zero emissions before 2050.

The initiative is a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF) and one of the We Mean Business Coalition commitments. The SBTi defines and promotes best practice in science-based target setting, offers resources and guidance to reduce barriers to adoption, and independently assesses and approves companies’ targets. www.sciencebasedtargets.org @sciencetargets

About Anthesis

Anthesis is the sustainability activator. Proud to be a B Corp, Anthesis seeks to make a significant contribution to a world which is more resilient and productive. This is done by working with cities, companies, and other organisations to drive sustainable performance. Anthesis develops financially driven sustainability strategies, underpinned by technical expertise and delivered by innovative collaborative teams across the world. The company combines the reach of big professional services groups with the deep expertise of boutiques. Anthesis has clients across industry sectors from corporate multinationals such as Reckitt Benckiser, Cisco, Tesco, The North Face and Target, and also supports early-stage companies through Anthesis Ventures. The company brings together 600 experts operating in 40 countries around the world and has offices in Andorra, Brazil, Canada, China, Colombia, Finland, France, Germany, Ireland, Italy, the Middle East, the Philippines, Portugal, Spain, Sweden, the UK, and the US. www.anthesisgroup.com

About the UN Principles for Responsible Investment

The Principles for Responsible Investment (PRI) is the world’s leading proponent of responsible investment. Supported by the United Nations, it works to understand the investment implications of environmental, social and governance (ESG) factors and to support its international network of investor signatories in incorporating these factors into their investment and ownership decisions. The PRI acts in the long-term interests of its signatories, of the financial markets and economies in which they operate and ultimately of the environment and society as a whole. Launched in New York in 2006, the PRI has grown to more than 4,300 signatories, managing over $121 trillion AUM. 

About Initiative Climat International (iCI)

iCI was the first international initiative for private equity firms aiming to address climate change. It was originally launched as the iC20 (Initiative Climat 2020) in 2015 by a group of French private equity firms to contribute to achieving the Paris Agreement’s objectives – to limit global warming to well below 2C, and to pursue efforts to limit warming to 1.5C.

iCI is a global community of investors seeking to understand better and manage the risks associated with climate change. Members commit to sharing knowledge, tools, experience and best practice among peers to help build and manage both climate‐aligned and climate‐resilient portfolios. iCI is supported by the Principles for Responsible Investment, and is a Supporting Partner of The Investor Agenda. iCI is open to all private equity firms and investors to join.

For further information, please visit collaborate.unpri.org/group/761/stream.