Committing to the 1.5 °C target 

(Published: Nov 08, 2021)

On November 8, 2021, the Science Based Target initiative (SBTi) released a tailored guidance, written in partnership with Anthesis and supported by the UN PRI and signatories of Initiative Climate International (ICi), to drive action that would enable a wide adoption of science-based targets by private equity investors.  

As an active member of the Private Equity Expert Advisory Group for the Science Based Target initiative Stephanie Hubold, Head of ESG at Altor, along with the group provided expert feedback and direction in creating the SBTi’s guiding document for private equity. The purpose and ambition with the guidance is to enable a wide adoption of science-based targets by private equity investors. When the new SBTi guidance was launched at COP26, Altor committed to setting a science-based target in line with the 1.5°C ambition. The next step is to get the target approved by the SBTi and to further integrate it into our operations. This is one of many efforts led by Stephanie Hubold to heighten the ESG standards at Altor. 

Developed in consultation with leading sector experts and PE firms, representing a total of assets under management of more than a trillion euros, the new guidance is tailored to the unique business models and asset classes of private equity firms, to align their investment portfolios and operations to well-below 2°C and 1.5°C climate scenarios.   

Six private equity firms to have their 1.5°C science-based targets validated are Astorg, Bregal Investments, EQT, FSN Capital, Hg, Intermediate Capital Group (ICG) and Investindustrial proving the effectiveness of the guidance by setting approved and validated targets aligned with 1.5°C.  

Altor, Eurazeo, Montagu Private Equity, Tikehau Capital and Triton Partners also committed to have their SBTi targets approved within two years. SBTi states that these firms are leading the decarbonization effort within the sector by shifting their engagement strategies to prioritize sustainability and low-emissions practices.  

The guidance identifies challenges private equity firms commonly face to develop and achieve targets, and provides recommendations to overcome these common barriers, taking regional differences into consideration. Its release intends to raise the ambition of the private equity industry by defining and promoting best practice in science-based target setting and providing methods, criteria, guidance, and tools to reduce the barriers to adoption and implementation.  

For the development of this guidance, the SBTi formed an Expert Advisory Group, a group of volunteer advisors from the private equity industry, academia, consultancies, non-profit and multilateral organizations with in-depth knowledge of science-based target setting for the private equity industry. The EAG serves in a technical advisory capacity for the SBTi private equity sector project and provides requested input and advice to priority topics and decisions.  

Private equity firms are encouraged to use the guidance to set emissions reductions targets across their operations and portfolio company engagement targets aligned with the goals of the Paris Agreement. In addition, the SBTi is developing a Net-Zero Standard for Financial Institutions that is expected to be released in 2022 to help the sector standardize and drive financial climate action.