Climate-Aligned Private Asset Intro

Institutional investors are sharpening their focus on the financial impacts of climate change in private-asset portfolios. Though climate risk affects every asset, the challenge of addressing it intensifies with private portfolios because of the opacity that can characterize such assets.

Limited Partners (LPs) are aligning their strategies with global temperature targets and assessing climate-related risks and opportunities.

General Partners (GPs) are examining the climate resilience of portfolio companies and other unlisted assets, pursuing climate engagement and offering investors insight into the impact of transition and physical risk on valuations.2

See how investors use MSCI ESG Research and Burgiss, a market leader in data and analytics for private assets, to take climate change into account across public and private asset classes.

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Why Climate-Aligned Private Asset Portfolio?

What is Carbon Footprinting of Private Equity and Debt Funds?

Carbon Footprinting of Private Equity and Debt Funds offers comprehensive data and analysis for measuring and monitoring greenhouse gas emissions within private equity portfolios. The tool, which combines performance data produced by Burgiss with climate risk models developed by MSCI ESG Research, helps investors measure and compare Scope 1, 2 and 3 emissions of private companies and other unlisted assets, and to see how climate risk may affect private company valuations.3

Data and analysis is also available on financed emissions (relevant for Scope 3, category 15 reporting) on Burgiss universe of 50,000 companies to provide a more complete carbon footprinting picture for a PCAF and TCFD aligned reporting approach.

Carbon Footprinting of Private Equity and Debt Funds is available as an extension of Burgiss Transparency Data delivered through the Burgiss Private i® Analytics Platform, Climate Lab Enterprise, Risk Manager and other third-party platforms.

How can clients use Carbon Footprinting?

Carbon Footprinting of Equity and Debt Funds helps investors understand the long-term implications of climate change in private asset portfolios.


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LPs

  • Measure and monitor the greenhouse gas emissions of private equity portfolios, based on estimates for more than 20,000 companies in more than 4,000 active private equity and debt funds
  • Aggregate and compare 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
  • Assess how general partners engage portfolio companies on climate and ESG
  • Meet net-zero commitments and report on decarbonization of private asset investments pursuant to the Task Force on Climate-related Financial Disclosures (TCFD) and PCAF

GPs

  • Measure exposure and optimize portfolios based on climate change metrics
  • Model and set the baseline for portfolio company emissions
  • Inform climate engagement
  • Monitor decarbonization efforts and progress against climate targets
  • Meet net-zero commitments and report climate change metrics to limited partners
  • Create value through decarbonization engagement and alignment with global temperature targets

How Climate-Aligned Private Asset Portfolio works

Using Analytical Tools to Address Climate Change in Private-Equity Portfolios

  Measure Carbon Footprint Assess resilience to risks and opportunities Create climate-aligned strategies Conduct due diligence Climate risk and ESG reporting
Limited Partners ✓ ✓ ✓   ✓
General Partners ✓ ✓ ✓ ✓ ✓
Companies ✓ ✓     ✓
Consultants ✓ ✓   ✓  

Cutting-Edge Climate Insight Across Your Entire Portfolio

MSCI helps investors address the financial impacts of climate change at every stage and better understand how the risks and opportunities of a warming climate may affect their portfolios.

  • Carbon Emissions

    Determine and benchmark companies’ complete carbon footprint (Scope 1, 2 and 3).

  • Transition Risk

    Assess risks companies may face in the transition to a net-zero economy.

  • Physical Risk

    Estimate exposure of companies’ operations to extremes of weather, flooding and other physical risks.

  • Implied Temperature Rise

    Estimate alignment of companies or portfolios with global temperature targets.

  • Climate Scenario Analysis

    Stress test the performance of portfolios for varied climate transition and physical risk scenarios.

  • Real Estate Climate Value-at-Risk (Climate VaR)

    A forward-looking and return-based valuation assessment for individual assets and portfolios.

 

Request a demo of Carbon Footprinting of Private Equity and Debt Funds. Or get in touch to discuss aligning your portfolio with growing climate considerations.

Request a Demo

 

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Climate-Aligned Private Asset Portfolios Construction Related Cards

How Climate-Aligned Private Asset Portfolio works Duplicate 1

1 MSCI ESG Ratings, research and data are produced by MSCI ESG Research LLC, a subsidiary of MSCI Inc. MSCI ESG Indexes, Analytics and Real Estate are products of MSCI Inc. that utilize information from MSCI ESG Research LLC. MSCI Indexes are administered by MSCI Limited (UK).

2 “Private markets are a hot topic for 2022,” FT, January 14, 2022, https://www.ft.com/content/45ecf00a-0efe-4bc5-8c54-ca626ada4ecd?shareType=nongift (opens in a new tab)

3 Information containing any historical information, data or analysis should not be taken as an indication or guarantee of any future performance, analysis, forecast or prediction. Past performance does not guarantee future results. MSCI ESG Research products and services are provided by MSCI ESG Research LLC, and are designed to provide in-depth research, ratings and analysis of environmental, social and governance-related