PE firms unite to fight climate change

Five global private equity firms have come together to launch the One Planet Private Equity Funds (OPPEF) initiative, in a bid to accelerate the fight against climate change and meet the goals of the Paris Agreement.

The firms aim to “advance the understanding of climate-related risks and opportunities” within portfolios companies so they can “build better and more sustainable businesses”, the founding PE houses said in a joint statement.

The formal announcement of the initiative was made during a meeting with President Emmanuel Macron on Friday, 20 November, ahead of the 5th anniversary of the Paris Agreement, in December.

The French leader met 33 chief executive officers from the world’s largest institutional investors, who manage an aggregate $30tn in assets. They discussed the lack of a global reporting standards for climate-related issues and the need for a sustainable recovery from Covid-19.

“I count on all members, sovereign wealth funds, asset managers, private equity firms to continue to use their collective power and ambition to accelerate the financing of the ecological transition and mitigate climate change,” Macron said.

The founding members of OPPEF include Ardian, Carlyle, Global Infrastructure Partners Macquarie Infrastructure and Real Assets (MIRA) and SoftBank Investment Advisers. Together, they will collaborate with One Planet Sovereign Wealth Fund (SWF) Working Group, an international coalition established in 2017.

The group of SWFs have been working on the implementation of a framework for how they should systematically take account of climate change in their decision-making processes – and how they can act together to contribute to ambitious climate action in the long-term, following the objectives of the Paris Agreement.

The framework has set out a set of principles to accelerate the integration of climate change analysis into the management of large, long-term and diversified asset pools.

Since the framework was launched, in 2018, the initiative has grown in the past two years from six founding members with $3tn of assets to 33 members with over $30tn of assets today.

Carlyle chief executive, Kewsong Lee, called climate change “one of the most pressing issues of our time” and said the firm is “committed to embedding the consideration of climate change-related risks and opportunities” in its investment decisions. The US-based firm today manages $230bn in assets across six continents.

Ardian, another champion of the initiative, currently manages $100bn in businesses in Europe, North America and Asia. The firm’s president, Dominique Senequier, told Private Equity News: “Today’s pledge is another important step forward for how we in finance can take what we do in our daily lives and ensure it has a beneficial impact on wider society.”

“Climate change is one of the biggest issues of our time. We are a major investor already in renewable energy, but more than that we must increasingly stand with each other in our industries and go further in order to make a positive difference to the global climate agenda,” Senequier added.

Source: Private Equity News