Investor group seeks help to assess PE alignment with Paris Agreement goals

Europe
On the 02/25/21 at 7:27AM

by

Adrien Paredes-Vanheule

The Institutional Investor Group on Climate Change (IIGCC) is continuing its Paris Aligned Investment Initiative, exploring methodologies and concepts for investors to align and assess alignment of their portfolios with the Paris Agreement targets.

After it published its work on alignment assessment of sovereign bonds, listed equity and corporate fixed income and real estate to Paris Agreement targets in August 2020, IIGCC is now turning to infrastructure and private equity. The coalition has launched a request for proposals for methodologies aimed at measuring the alignment of a private equity portfolio, and managing that portfolio to increase alignment and achieve targets.

The information gathering process should identify different methodologies for assessing the alignment of assets to net zero goals. “These methodologies may be: a) Third party provided methodologies for the assessment of private equity asset or portfolio alignment b) Investors’ in-house methodologies or approaches for this assessment c) Methodologies used for other asset classes that could be applied to, or adjusted to be used for, private equity. At a minimum the methodologies included in the Net Zero Investment Framework should be considered,” specified IIGCC. It added the process should also look at investors practices over time in the asset class.

According to IIGCC’s RFP, the consultant should provide an assessment of available methodologies, based on:

- Consistency with the five assessment criteria of the Net Zero Investment Framework;

- Relevance / consistency with the methodologies and approaches set out for other asset classes, aggregation of metrics for portfolio targets currently in the Framework, and inclusion in SAA processes;

- Broader advantages, disadvantages or considerations for the application of the methodologies identified.

The chosen consultant will have to outline when and how different approaches can be applied to most effectively achieve targets and impact. IIGCC is asking for a 20-25 page report “succinct, clear and in plain English” while the chosen consultant will be meeting with the coalition’s private equity working group to present the draft review of methodologies and discuss findings. The deadline for application is Monday 8 March, 12pm GMT. All proposals shall be submitted to Daisy Streatfeild (dstreatfeild@iigcc.org). IIGCC expects to begin work in March and finish it by the end of April.

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