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MSCI and Burgiss launch carbon footprinting of private equity and debt funds

MSCI Inc (MSCI), a provider of critical decision support tools and services for the global investment community, and The Burgiss Group, LLC, a provider of data, analytics and technology solutions for investors of private capital, have launched a new analytical tool that enables institutional asset owners and managers to better understand the impact of climate change on private asset portfolios. 

Launched ahead of COP26, the Carbon Footprinting of Private Equity and Debt Funds measures the carbon intensity of private equity and debt funds. The analytical tool is designed to address a serious transparency gap in the private assets market, spanning private equity, fixed income, and venture capital investments. Though the transition to net-zero affects every asset, the challenge of addressing climate risk intensifies with private portfolios, both because of the importance of private assets in institutional portfolios and the opacity that can characterise them.
 
With emissions estimates for over 15,000 private companies and nearly 4,000 active private equity and debt funds, the tool will support institutional investors, including those who have made public net-zero commitments, to assess climate-related risks holistically across asset types and align their private asset portfolios with global temperature targets. 
 
“The investors who power private assets — such as pension and sovereign wealth funds, endowments, and family offices — are increasingly expressing the need to know the carbon intensity of their portfolios and whether investments in unlisted assets are furthering their long-term strategies,” says Remy Briand, Global Head of ESG and Climate at MSCI. “This new tool is an important addition to our climate solutions toolkit and will help clients make better informed investment decisions in support of their transition to net-zero.” 
 
Carbon Footprinting of Private Equity and Debt Funds combines private company data from Burgiss, which institutional investors across the world turn to for insight into private asset funds, with modelling developed by MSCI ESG Research for estimating corporate carbon emissions. The analytical tool helps investors:

•    Measure and monitor greenhouse gas (GHG) emissions of private equity portfolios, based on estimates for over 15,000 companies in more than 4,000 active private equity and debt funds
•    Aggregate and compare GHG emissions by fund, asset class, strategy, or portfolio
•    Align private asset portfolios with global temperature targets
•    Identify carbon-intensive investments and low-carbon investment opportunities 
•    Measure the carbon footprint of private equity funds to inform engagement 
•    Measure progress towards net-zero commitments and report on decarbonisation of private equity and debt portfolios pursuant to the Task Force on Climate-related Financial Disclosures (TCFD)

“The combination of Burgiss and MSCI ESG Research gives investors a critical tool, with extensive coverage, to measure progress towards Carbon Footprint goals within their private capital portfolios,” says Brian Schmid, Head of Private Capital Product Management and Applied Research at Burgiss. 

“With this launch, Carbon Footprint estimates are now available for over 85 per cent of the assets within buyout funds and over 65 per cent of the assets within venture capital funds by valuation, based on the Burgiss universe. Burgiss and MSCI are committed to making the same tools that manage climate risks and goals within public markets available to the private markets.”
 

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