15 September 2020
Investment firms should take responsibility for their carbon emissions in a way that delivers real, measurable results for the environment, global consumers and their business. By Vaughan Lindsay
Many investment firms are looking to a future in which they meet their Net-Zero targets, achieving an overall balance between emissions produced and emissions taken out of the atmosphere. However, setting these long-term targets does not always compensate for the environmental damage being done right now and companies should be taking full responsibility for all the emissions they produce-, both today and tomorrow. argues Vaughan Lindsay, Chief Executive of ClimateCare, the UK's highest scoring profit-for-purpose B Corporation that finances, manages and develops climate projects around the world.
Over the past 18 months, there has been growing ambition in how many corporations think about the impact they are having on the environment. An increasing public awareness of climate change and changing consumer behaviours has catalysed this shift that, when combined with pressures coming from investors and governments, has driven increasing climate ambition and action in the investment space.
So much so, in fact, that companies who have previously engaged with climate change mitigation mainly due to corporate social responsibility are now beginning to see it as a business-critical issue. But robust and transparent ESG policies that go beyond 'do no harm' are no longer a nice to have, rather they are now fundamental to the success of every investment strategy.
We are increasingly getting inquiries from private equity houses and asset managers saying they've offset their business travel and office costs; they've done all that, but this is usually a very small part of their carbon footprint. What we then need to ascertain is what more they can do to strengthen their climate action across their entire investment portfolio. The next step is for investment companies to become climate-neutral investors.
Doing this involves a whole suite of actions that include screening to avoid highly carbonised sectors, understanding the carbon footprint and awareness of their investee companies, taking action to reduce this carbon footprint and offsetting their residual emissions. We need to take full responsibility for our carbon emissions right now, to ensure that the journey to net zero is as fast as possible.
The benefits for investment companies acting now to offset their emissions are plentiful; the Nordea Equity Research report for instance found companies with the highest ESG ratings outperformed the lowest-rated firms by as much as 40 per cent.
One of the private equity investment firms leading the charge on this is Triton Partners, a leading European firm invested in portfolio companies with combined sales of €17.4 billion. Part of Triton's investment strategy is to increase environmental ambition across its investment portfolio. It does this by raising awareness of climate-related risks and opportunities and supporting portfolio companies to take responsibility for carbon emissions through carbon offsetting.
ClimateCare works closely with the Triton ESG team to create and deliver a sector-leading offsetting programme, which enables their portfolio companies to compensate for their emissions by supporting rainforest protection and renewable energy projects.
As a result, Triton hopes to build the value and resilience of its portfolio. At the same time, it is preventing the release of around 300,000 tonnes of CO2 a year into the atmosphere, empowering communities and protecting precious rainforest habitat, which is home to hundreds of endangered plants and animals.
Graeme Ardus, Head of ESG at Triton, explains: "Offsetting with ClimateCare is part of a wider energy transition strategy for Triton that is focused on building better businesses by encouraging change through being more energyefficient and adopting low carbon technology. Our role is to support that change for the better across our portfolio companies."
With the expertise of organisations such as ClimateCare, investment companies can accelerate their ambition today by compensating for residual emissions with a robust carbonoffsetting programme. This strengthens both their value and brand.
Certainly, the time to act is now. A robust and transparent climate strategy is no longer optional in the investment sector. It's an essential element of a successful investment strategy to attract new capital and manage climate-related risks, and of course, harnesses the opportunities of an economy transitioning to a low-carbon state.
Join ClimateCare's next ESG webinar to hear the Triton team explain more about how they are turning their climate risk into climate opportunity. Register here: http://bit.ly/ClimateCare-Triton-webinar