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PE lagging on climate action, says new study

A new assessment of the fossil fuel policies of 15 of the largest private equity firms operating in North America and Europe, has found that the sector is lagging behind other investors in terms of action on climate change. 

A new assessment of the fossil fuel policies of 15 of the largest private equity firms operating in North America and Europe, has found that the sector is lagging behind other investors in terms of action on climate change. 

The first publicly-available assessment, which has been added to Reclaim Finance’s Oil & Gas Policy Tracker and Coal Policy Tool, finds that just two of the 15 largest private equity firms have a policy setting out rules regarding investments in the coal sector, and only one has a policy covering the oil and gas industry.

Previous research has shown that between 2020 and 2021, private equity firms bought $60 billion of oil, gas and coal assets from energy companies, highlighting the role private equity is playing in keeping coal alive – with these transactions serving to reduce the portfolio emissions of the seller without actually reducing emissions in the real world.

Reclaim Finance’s Private Equity Analyst, Andréa Hernandez, said: “Private equity firms appear to be behind the curve when it comes to climate action. While some firms have taken initial steps, far too many seem happy to invest in fossil fuel activities, providing a crucial lifeline to activities which are rightly recognised as toxic by other investors. Private equity investors need to up their game and use their influence with fossil fuel companies to drive change.” 

Reclaim Finance is calling on pension funds, insurance companies and other institutional investors who invest in private equity funds to also use their influence to push private equity firms to make a real move away from fossil fuels.

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