Institutional Investors Group on Climate Change (IIGCC) and Principles for Responsible Investment (PRI) have published a guide on current and emerging practice, which assesses the impact of climate change on private equity investments.
The guide consists of the following two sections:
1. A summary of the rationale for incorporating climate change concerns in private equity investments.
2. Outline of the framework that Limited Partners (LPs) and General Partners (GPs) can use in due diligence and when engaging with their fund and portfolio company investments.
Section 2 presents a series of questions that LPs can ask their GPs, and that GPs can ask current or potential portfolio companies. According to the guide, each question is supported by guidance which explains the rationale behind each question, along with examples in emerging practice. The questions address key aspects of climate change and private equity investment.
According to James Holey, UK Head of Responsible Investment in KPMG, the guide aims to assist private equity LPs and GPs better understand, assess and monitor the investment opportunities and risks presented by climate change, its mitigation and the increasing global regulation driving towards a low-carbon economy.
IIGCC’s CEO Stephanie Pfeifer states that the revised guide covers a range of issues facing investors, such as the measurement of carbon emissions in private equity investment, advise on how to engage across the investment supply chain to reduce carbon asset risk and on how to seek out low carbon investment opportunities.
Download a copy of the guide here