In brief: Energy transition ‘generating new risks and imperatives for PE portfolios’, says Bain

A future in which portfolio companies are required to decarbonise poses 'a real risk for GPs', according to Bain's annual report.

GPs are under pressure from investors and regulators to establish clear emissions-reduction strategies, according to a new report on the PE landscape from Bain & Company.

The report highlights that private companies have historically been under less pressure to reduce their carbon footprint than public ones. This is now changing as regulation of companies’ Scope 1 and 2 emissions becomes more common. Proposed SEC regulation requiring public companies to disclose Scope 3 emissions is also set to impact private suppliers upstream.

Bain recommends that managers and portfolio companies ask themselves the following questions when formulating their decarbonisation approach:

  • What’s the potential downside of doing nothing about our carbon exposure?
  • How can we bring upside to the carbon challenge in the normal course of due diligence and value creation?

The report contains a case study of a telecoms company’s decarbonisation journey and is worth a read.