Regulatory Briefing: New disclosure standards by UN-backed iCI
The UN-backed Initiative Climat International (iCI) has launched a new standard, which is said to set out a consistent approach to greenhouse gas emissions disclosure across the private equity sector for the first time. It provides guidance on topics such as how to aggregate emissions at the fund level and how to report to stakeholders.
The initiative, outlined in the document Greenhouse Gas Accounting and Reporting for the Private Equity Sector, aims to bring private equity more in line with quoted companies. In addition to support from the UN-backed Principles for Responsible Investment, it also has backing from sustainability investor network Ceres and stakeholder engagement platform CDP. More than 160 firms, representing over $3tn, have joined the iCI.
A blueprint. PRI head of private equity Peter Dunbar says: “When it comes to measuring and reporting financed emissions, the private equity asset class remains a distance behind public markets. This excellent guidance will equip private equity ESG professionals with a blueprint based on pre-existing global standards, which will help them improve the quality of their GHG emissions reporting. This improvement will benefit asset owners, who often lack good quality reporting from private equity firms, and enable the asset class to close the gap with public markets.”
Buying dirty? Private equity general partners (ie, those responsible for the management of the partnerships) are being increasingly called on to disclose climate-related data and establish ambitious targets across their portfolios. But often there is no common language with the limited partners (ie, those who are merely investors). The main concern is not simply that private equity may be lagging quoted companies, but that the sector may actively snap up the dirty energy assets that public companies have been forced to sell.