Accelerating Decarbonisation Targets in Private Equity Portfolios

Anthesis Decarbonisation Playbooks

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How can private equity firms effectively integrate ESG principles into their investment strategies and drive ambitious decarbonisation targets within their portfolio companies?

The reality is that many companies struggle with the complexities of setting and achieving Science-Based Targets (SBTs), facing limited resources and sector-specific challenges. A strategic approach is crucial.

A recent October 2024 report from the ESG Data Convergence Initiative (EDCI) highlighted this challenge: despite growing pressure, only 19% of the 6,200 private companies held by over 260 private equity (PE) firms have a short-term GHG emissions reduction target in place.

From our experience, five key factors are preventing sponsor-backed businesses from setting targets:

  1. SBT complexity: Understanding the requirements and nuances of different types of SBT is demanding.
  2. Practical implementation: Translating ambitious SBTs into tangible, actionable steps within resource-constrained organisations proves difficult.
  3. Cost uncertainty: Determining the financial implications of decarbonisation initiatives is challenging.
  4. Value quantification: Demonstrating the direct link between decarbonisation efforts and enhanced financial performance is not always straightforward.
  5. Differing priorities: Decarbonisation not always a high priority for stakeholders with differing views on climate action.

These challenges highlight the critical need for practical tools and strategies to accelerate decarbonisation within PE portfolios.

We have been working with PE firms and their portfolios to overcome the above challenges with a comprehensive, data-driven approach to decarbonisation, which led to the development of Anthesis’ Private Equity Decarbonisation Playbooks.

Built from decades of decarbonisation and private equity sector experience at Anthesis, the Playbooks introduce PE firms and their portfolio companies to the practical frameworks and tools needed to achieve ambitious decarbonisation goals. The resource is designed to maximise value, keep organisations ahead in a rapidly evolving landscape, and activate portfolio companies on their net zero and decarbonisation journey.

Once implemented, Playbooks aren’t just a set of instructions; they are a catalyst for internal knowledge sharing and collaboration, enabling your teams to work together to effectively navigate the complexities of decarbonising. Our Playbooks are already improving the dialogue and strategic alignment for our clients, empowering investment teams to work effectively with the ESG team and portfolio companies.

Discover the Private Equity Decarbonisation Playbooks

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