Climate-focused private equity consortium initiative Climat International announced today the release of a new report introducing a standard for accounting and reporting greenhouse gas (GHG) emissions for the private equity sector, developed in partnership with sustainability advisory firm ERM.
According to the report, the new standard comes as private equity GPs are increasingly facing pressure to report on emissions and set climate targets for their portfolios, but many lack robust processes for carbon accounting, target setting and benchmarking.
The report recommends an approach to collecting, calculating and reporting of carbon footprint data that can be directly applied to GPs’ operations and investment activities, applying the principles of emissions accounting standards provider the GHG Protocol and financial institution-focused emissions measurement and reporting organization’s the Partnership for Carbon Accounting Financials (PCAF)’s Global GHG Accounting and Reporting Standard.
According to ERM Group CEO Tim Reichert, the new standard “will enable a more consistent and streamlined approach to the calculation and disclosure of emissions, and will support private equity firms as they seek to understand and drive down emissions across their portfolios.”
Key topics covered by the report include calculation of Scope 1, 2 and 3 GHG emissions for GPs and for each portfolio company, including identifying emissions sources, data collection for the various emissions scopes, assessing relevance and materiality of value chain emissions, and calculation methodologies; accounting, attributing and calculating financed emissions, and; reporting and metrics for disclosing emissions data publicly and to stakeholders. The report also contains guidance for emissions reduction initiatives, target setting and net zero alignment, as well as for assurance and verification of GHG data management and reporting.
The report was supported by the Principles for Responsible Investment (PRI), and endorsed by Environmental criteria consider how a company performs as a steward of nature. More disclosure platform CDP and sustainability-focused non-profit Ceres.
Peter Dunbar, Head of Private Equity at the Principles for Responsible Investment, said:
“When it comes to measuring and reporting financed emissions, the private equity asset class remains a distance behind public markets. This excellent guidance will equip private equity Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. More professionals with a blueprint based on preexisting global standards, which will help them improve the quality of their GHG emissions reporting. This improvement will benefit asset owners who often lack good quality reporting from private equity firms and enable the asset class to close the gap with public markets.”
Click here to access the report, Greenhouse Gas Accounting and Reporting for the Private Equity Sector.
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