“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.”
Director for ESG Advisory Services, Anthesis
Anthesis, the largest group of dedicated sustainability professionals globally, is proud to have supported the Science Based Target Initiative (SBTi) to develop dedicated guidance for the private equity industry. Written in partnership with an expert advisory group of over 30 private equity firms, the guidance helps private equity firms set and reach science-based targets across their operations and investments.
Anthesis was selected by the project sponsors to write and deliver the guidance based on its breadth of experience both working with private equity and supporting the real economy in both setting science-based targets and reducing emissions. Anthesis supported the development pro bono as part of its ambition to activate sustainable impact and the awareness of the importance of the finance industry in driving the transformation and decarbonisation required in the decisive decade.
“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.”
Alberto Carrillo Pineda
Managing Director and Co-founder of the SBTi
The following abstract was taken from the SBTi website:
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.
The first 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.
“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.”
CEO, Principles for Responsible Investment
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.Find out more about setting and reaching a science-based target