All of EQT’s control investments “should be on track to deliver on their own net zero pathways by 2040 or before”, chief executive Christian Sinding announced on Friday.
EQT has committed to reaching net-zero carbon emissions by 2040 across its portfolio as a whole. Sinding’s announcement – a reference to the firm’s net-zero guidelines released earlier this month – provides further detail on how EQT intends to achieve its net-zero decarbonisation commitments.
EQT had its own decarbonisation pathway validated by the Science Based Targets Initiative in 2021, becoming the first private equity firm to do so. Through the validation process, the firm helped develop the SBTi’s private equity guidance and validation criteria. The SBTi requires private equity firms to commit to all controlled assets setting targets validated by the SBTi by 2040. EQT’s requirement for assets to also be on track by this date goes a step further.
“Being at the forefront of sustainability will make our portfolio companies more valuable and also strengthens EQT’s position as a climate leader in private markets,” Sinding said in his opening remarks on the firm’s H1 update on Friday.
Under the SBTi’s private equity requirements, portfolio companies and assets should develop their own 1.5 degree aligned-decarbonisation pathways. Such pathways include net zero and interim targets for the company or asset to be consistent with a net-zero world by 2050 – an essential scenario to limit global warming to 1.5 degrees.
Per EQT’s latest commitments, the firm requires companies and assets that it has a controlling stake in to have both formulated such a pathway and be on track with the pathway by 2040. Some of these pathways will require the company or asset to be net zero by 2040; for EQT’s investments in harder-to-abate sectors, net-zero targets may be as late as 2050, New Private Markets understands.
By 2030, EQT has committed to having these targets validated by the Science Based Targets initiative for 100 percent of its controlled portfolio companies and 50 percent of its controlled real estate assets that EQT has owned for more than two years. Fifty percent of controlled portfolio companies must also be on track with their pathways by 2030. So far, 21 portfolio companies’ targets have been validated by the SBTi, according to EQT’s H1 report.
EQT also joined the Net Zero Asset Managers Alliance last year, which requires signatories to set a portfolio-wide 2050 net-zero target, although EQT’s target is 10 years sooner than NZAM’s requirement.