6 PE firms representing €133 billion AUM have climate targets approved

The Science Based Targets initiative (SBTi), one of the key organizations focused on aligning corporate environmental sustainability action with the global goals of limiting climate change, announced today the launch of new guidance targeted at private equity firms to help enable them to align their investment portfolios and operations with global climate goals, including the well-below 2°C and 1.5°C climate scenarios.

Founded in 2015, SBTi was formed as a collaboration between CDP, World Resources Institute (WRI), the World Wide Fund for Nature (WWF), and the United Nations Global Compact (UNGC), with the goal to establish science-based environmental target setting as a standard corporate practice. Following the release of the Intergovernmental Panel on Climate Change’s (IPCC) Special Report on 1.5°C in 2018, highlighting the impacts of 1.5°C warming and calling for a strengthened global response, SBTi raised the minimum ambition of its approval framework from 2°C to well-below 2°C, and launched the Business Ambition for 1.5°C, a campaign aimed at accelerating 1.5°C target setting.

Earlier this year, SBTi tightened its criteria for approved climate targets, announcing that it will soon only accept targets aligned with its 1.5°C warming ambition, as required to avoid the worst impacts of climate change.   

Alberto Carrillo Pineda, Managing Director and Co-founder of the SBTi, said:

“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.”

Written in partnership with Anthesis and supported by the UN PRI and signatories of Initiative Climat International (ICi), and developed with an Expert Advisory Group including sector experts, NGOs and PE firms, the guidance is tailored to the unique business models and asset classes of private equity firms, identifying and addressing the challenges they face in developing and achieving targets.

Fiona Reynolds, CEO, Principles for Responsible Investment, said:

“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.”

Along with the release of the guidance, six private equity firms, representing over €130 billion in assets under management, announced that they have set SBTi-approved targets aligned with 1.5°C. The PE firms include Astorg, Bregal Investments, FSN Capital, Hg, Intermediate Capital Group, and Investindustrial.

Additionally, SBTi reported that several other firms, including Altor Equity Partners, Eurazeo, Montagu Private Equity, Tikehau Capital and Triton Partners, have committed to having their own targets approved within two years.

Benoît Durteste, CEO and CIO of Intermediate Capital Group (ICG), said:

“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.”