The appetite for ESG integration in private equity has grown strongly since the 2nd edition of this guide in 2011. Limited Partners (LPs) and General Partners (GPs) realise that responsible investment can contribute to both value creation and risk mitigation in this asset class. However, given the relationship between the LPs, GPs and portfolio companies, there are certain challenges to implementing responsible investment in private equity.
As the climate crisis, its physical impacts and the transition to a net-zero emissions economy all accelerate, global institutional investors increasingly recognize the material and financial risks to their portfolios. Large institutional investors know they must assess and manage climate-related risks if they are to meet their fiduciary duties to clients and beneficiaries.
Businesses are facing increasing demands from their stakeholders to be more transparent about their practices and exposure to risks related to their environmental, social, and governance (ESG) performance. Pushing against the trend for more transparency are the costs of data collection, requirements for assurance, exposure to legal jeopardy, and legitimate perceptions of reputational risk. This report navigates this ‘transparency dilemma’, to build a better understanding of the risk/return profile of transparency and thereby help companies to balance competing interests.
The financial industry’s increased emphasis on and adoption of sustainable investing raises several important questions: Is this trend a precursor to fundamental change in the theory and practice of investment? Is it just a passing fad? Or worse, an intentional exercise in “greenwashing”? If it in fact represents a fundamental change in how investment is to be conducted, how do asset owners know which financial products and services and which asset managers are truly addressing the major, material systemic social and environmental challenges of our time (e.g. climate change and income inequality)?
Decarbonizing the electricity sector is critical to achieving climate goals. The United Nations
Intergovernmental Panel on Climate Change (IPCC) 2018 report found that global carbon emissions must
be cut by nearly half by 2030, and then reach net-zero by 2050 if we are to have a 50 percent chance at
limiting warming to 1.5° C above pre-industrial levels. The power sector is responsible for 33 percent of
U.S. energy related CO2 emissions according to the U.S. Energy Information Administration (EIA, and
decarbonization of the power sector is critical to enabling other sectors, such as transportation, to
decarbonize through electrificatio
There is now a critical mass of investors who recognize that issues of equity and environmental impact are central
to the success of businesses and the long-term health of the economy as a whole. Endowments and foundations,
charged with stewarding resources in the public interest over the long term, are increasingly integrating the risks
and opportunities associated with environmental, social, and governance (ESG) factors into investment policies and
practices. Motivations for doing so include the business case, the moral imperative, stakeholder demands,
and mission alignment.
We are facing a global health crisis unlike any
in the 75-year history of the United Nations
— one that is killing people, spreading human
suffering, and upending people’s lives. But this
is much more than a health crisis. It is a human
crisis. The coronavirus disease (COVID-19) is
attacking societies at their core.
Launched in 2009, the Nordic Engagement Cooperation (NEC) consists of four Nordic institutional investors:
The Folksam Group from Sweden, Ilmarinen Mutual Pension Insurance Company from Finland, KLP from
Norway and PFA Pension from Denmark. To complement our own engagement, we have made the strategic
decision to coordinate some of our engagement activities with companies on environmental, social and
governance issues. Collectively we have approximately EUR 245 billion in assets under management as of
the end of 2019.
This consultation brings forward non-statutory guidance for the trustees of
occupational pension schemes on assessing, managing and reporting climate-related
risks.
Sections of the guidance may be of interest to others, including managers of funded
public sector schemes.
This follows the Green Finance Strategy announcement of July 2019 that the
Government and The Pensions Regulator had jointly established an industry group to
develop TCFD guidance for pension schemes and would consult on the guidance.
FOSSIL FUEL FINANCE REPORT 2020Financial companies are increasingly being recognized — by
their clients, shareholders, regulators, and the general public —
as climate actors, with a responsibility to mitigate their climate
impact. For the banks highlighted in this report, the last year has
brought a groundswell of activism demanding banks cut their
fossil fuel financing, at the same time that increasingly extreme
weather events have further underscored the urgency of the
climate crisis.