Private capital is fueling the climate transition, and transition-related investments are proving that profitability and sustainability can go hand in hand. Investors across all sectors can seize opportunities by understanding where capital flows in the supply chain.

Integrating sustainability and climate risk and impact into bond and private-debt analysis is becoming an increasingly important aspect of portfolio construction. This paper discusses a range of metrics that could guide investors in making these assessments.

Our panel of experts, led by chief research officer, Ashley Lester, takes stock of global markets as we enter the back half of 2024. Ashley and team examine the short- and long-term issues affecting investors, including the ever changing geopolitical landscape, the continued impact of AI and the role of private markets in the carbon transition.

There is often a misconception among investors that when it comes to investments in renewables, there is a trade-off between climate impact and financial returns. We crunch the numbers to see if this holds true.  

In recent years, there has been a notable shift in private investments in energy. Understanding these trends and the financial side of renewable investments may be key for investors looking to allocate private money to energy-transition opportunities. 

In recent years, there has been a surge in climate-related names within both public and private funds, but their focus is often on different areas. We analyze the numbers to identify key trends and provide investors with greater clarity.

With private investments set to play a major role in the transition toward net-zero, we assess the state of emissions reporting in private markets relative to public markets and identify the reporting disparities across asset classes, regions and sectors. 

When it comes to climate investing in private equity, there’s more to negative screening than simple sector-wide exclusions. Our analysis underscores the value that incorporating carbon-based solutions can have on carbon footprint at the portfolio level. 

Approximately 26% of the financed emissions in private-equity and -debt funds are concentrated in the top 5% most carbon-intensive funds. How did excluding up to 20% of the most carbon-intensive funds affect returns? 

We use climate-transition risk estimates to compare exposure across asset classes and regions of the private-asset universe. 

While public markets are witnessing growing climate-related regulatory proposals and voluntary commitments, climate disclosures in private markets remain limited. We examine whether carbon emissions are migrating out of U.S. public markets.While public markets are witnessing growing climate-related regulatory proposals and voluntary commitments, climate disclosures in private markets remain limited. We examine whether carbon emissions are migrating out of U.S. public markets.

We examine the climate-transition risks from fossil-fuel combustion for set of private U.S. companies, employing the upstream approach. 

Using climate-transition risk models — both upstream and downstream —investors can work to put a climate price tag on private assets and compare exposures across asset classes and regions. 

The SEC’s climate-disclosure proposal also may affect U.S.-listed GPs’ portfolios. In reality, the rule may represent the camel’s nose under the tent as the SEC indirectly brings climate transparency to some private companies.

Understanding private capital’s exposure to the energy, materials and utilities sectors, and their related industries, across asset classes, may be critical in supporting more-informed risk management and engagement decisions.

Private-capital funds, which can quickly make large investments in specific targets, are potentially powerful agents in the fight against climate change. But where do private-equity and -debt funds stand in terms of their estimated carbon-emission intensities?