ICI signals growing climate agenda in Asia PE

ICI described its mission in the region as bringing together private market investors to reduce greenhouse gas emissions and accelerating the transition to a zero-carbon, climate-resilient economy.

The platform, which is closely associated with the UN’s Principles for Responsible Investment (PRI) network, said signatories have a critical role to play in reducing the carbon emissions of private companies and securing sustainable investment performance by managing climate-related risks.

Jie Gong, a partner at Pantheon and co-head of its ESG (environmental, social, and governance) committee, will chair ICI’s Asia Pacific chapter. Gong was previously a global committee member of PRI’s private equity advisory committee and founded the ESG committee of the Hong Kong Venture Capital & Private Equity Association (HKVCA).

ICI members commit to sharing knowledge, experience and best practice, and to working together to develop resources that will help standardise practices on climate risk mapping, disclosure and target-setting in private markets.

Prospective members must complete the manifesto and application form. If a firm’s home country does not have an existing network, the new member is expected to establish one and act as convenor. There are currently 23 signatories in Asia, representing China, Hong Kong, Singapore, and Australia.

“The degree of interest for a network in APAC, where in some markets there has historically been less focus on climate action, that supports collective ambition on climate across the private equity sector is very encouraging,” Peter Dunbar, head of private equity at PRI, said in a statement.

“The practitioner support and peer-to-peer collaboration among private equity firms that ICI enables are crucial as there is still much work to be done. The private equity industry still has some distance to travel regarding setting and realising climate goals, and ICI helps accelerate this process.”

GP-LP collaboration platforms in this vein are expected to expand and multiply in the near term, with other examples including Carbon Disclosure Project and the Science Based Targets initiative. Establishing ESG measurement standards, performance scoring, and guidance on portfolio accountability are priorities.

Carbon-themed fundraising and carbon credit schemes are set to proliferate as a result of this activity. Standout moves on this front in recent months include the launching of carbon-neutral funds by Primavera Capital Group and Hillhouse Capital with targets of CNY 10bn (USD 1.4bn) and CNY 4bn, respectively.

Meanwhile, ICI signatory KKR has invested in Australia-based carbon credit market GreenCollar. Across the industry, water, plastic, and biodiversity credit markets are also being developed. Related topics such as deforestation are expected to begin to feature regularly in LP questionnaires to GPs in the near future, although formal terms remain years away.

ICI was launched in 2015 by a group of French private equity firms that wanted to contribute to the Paris Agreement’s objective of limiting global warming to well below two degrees Celsius. It has 206 members globally managing more than USD 3trn in assets.

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• Topics
• Greater China
• Southeast Asia
• Australasia
• GPs
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• ESG