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 characterize 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,” said 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 decarbonization 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,” said 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% of the assets within buyout funds and over 65% 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.”
The Carbon Footprinting of Private Equity and Debt Funds is the newest in an arsenal of powerful climate tools that MSCI offers to help investors navigate net-zero at every stage. It follows the launch of MSCI’s Climate Lab, Net-Zero Tracker, and Implied Temperature Rise which works with its Target Scorecard and Net Zero Tracker to measure how companies are aligning to global temperature targets.
About MSCI Inc.
MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 50 years of expertise in research, data, and technology, we power better investment decisions by enabling clients to understand and analyze key drivers of risk and return and confidently build more effective portfolios. We create industry-leading research-enhanced solutions that clients use to gain insight into and improve transparency across the investment process.
Burgiss is a market-leading provider of data and analytics solutions for global investors of private capital. With over 30 years of expertise in private markets, we offer unrivalled data, analytics and transparency that enable asset owners, asset managers and financial intermediaries to understand, evaluate and manage private capital portfolios. We serve more than 1,000 firms in 32 countries, delivering data that represents over $8 trillion in private assets.
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