The Net-Zero Asset Owner Alliance (NZAOA) is a UNEP-backed program designed to facilitate climate progress in private equity. NZAOA consists of 85 asset owners working to decarbonize their portfolios. In a new document, the NZAOA outlines seven ways that General Partners (GPs) can integrate better climate practices:
- Align the firm with a credible net-zero or portfolio-transition strategy focused on value creation and preservation, with consistent governance, investment and management incentives, ownership and engagement activities, and public messaging.
- Continue to build decision-useful climate data, continuously improving financed emissions data coverage and quality, disclosing progress transparently and developing data frameworks that are integrated into investment activities.
- Leverage portfolio engagement channels, value-creation strategies and lender engagement tools to deliver decarbonization opportunities, future-proof portfolio companies and advance climate targets.
- Integrate physical risk and adaptation analysis into investment decisions, management and resilience planning.
- Manage exposure to high emitting assets with discipline and use fit-for-purpose tools to avoid stranding risk.
- Evaluate opportunities to participate in and support transition finance credibly, with clear definitions and a focus on decarbonization of the real economy.
- In line with the investment strategy, scale investments in climate solutions with clear criteria and impact reporting.
Previously, we’ve discussed the role private equity plays in the ESG ecosystem. While typically more resource-constrained than public companies pursuing ESG, private equity has spearheaded a business principles-led approach to climate and ESG management. Private equity is often an innovator when implementing better climate practices, and the lessons learned among private equity can spread to the economy at large.
Our members can learn more about private equity in ESG here.
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