decarbonisation

In brief: The argument against setting a net-zero target

With so many ESG data requests from LPs, one private equity firm is distinguishing between requirements and 'nice-to-haves' – and a portfolio-wide net zero target falls into the latter camp, a head of ESG says.

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“Hundreds” of data requests from LPs mean a private equity firm cannot prioritise making a portfolio-wide net-zero commitment, the one firm’s head of ESG said. He was speaking at PEI Group’s Responsible Investment Forum in San Francisco last week, which was held under Chatham House rule – meaning comments could not be attributed to speakers.

“We have investors with their own net-zero targets, and they’ve asked if we would think about setting one,” the ESG head said. “But we get hundreds of ESG data requests, and there’s no way we can meet every single one of them. We have to distinguish between what is expected of us, what we have to do, and what is a nice to have.” Setting a net-zero target “may be requirement in a few years, but it seems like right now it is not a requirement”.

“We invest in companies for seven to 10 years, so to ask companies to set a net-zero target for 2050, 27 years from now, generally goes beyond the scope of our responsibilities. But we do work with each company to try and reduce their emissions during the holding period,” he added.