Private equity firm Cinven is calculating the carbon footprint of its portfolio and plans to set a net-zero target in 2022.
The London-headquartered firm, which has 30 portfolio companies and manages assets worth nearly €30 billion, will join a growing list of investment firms setting net-zero targets for their portfolios – which includes 220 asset managers in the Net Zero Asset Managers Initiative, a group within the Glasgow Financial Alliance for Net Zero umbrella, and the seven private equity firms with net-zero targets verified by the Science-Based Targets initiative.
Cinven has appointed an external adviser to perform a “carbon footprinting exercise of its own operations and the financed emissions associated with its portfolio”, the firm said in a statement.
It has required portfolio companies to report carbon emissions “on a quarterly basis since 2016”, Allegra Day, who was appointed ESG director in September, said at PEI Media’s Responsible Investment Forum: Europe in London last week.
The firm has provided a training programme for its investment teams “to explore what green investment opportunities there are” and build ESG into its deal sourcing process, said Day. “At onboarding, Cinven sets up expectations with portfolio companies to create value from climate-related opportunities. We have a set of guidelines for how Cinven expects data to be captured and we’ve been capturing carbon emissions on a quarterly basis from portfolio companies since 2016. That’s now part of a bigger ESG questionnaire. And we work with each company to do a TCFD report,” she said.
Cinven has co-ordinated sustainability-linked financing for three portfolio companies. “We’re looking at sustainability linked loans for each new investment going forward,” said Day. The firm works with its portfolio companies and banks or credit providers issuing the loans to set annual emissions reduction targets and other sustainability KPIs for these portfolio companies, to develop a framework in which the borrower receives a discount on loan terms when these targets are met.