Thematic engagement: moving towards net zero together

Our objective and commitment to PFZW

Private equity contributes to achieving PFZW’s climate ambition: to help create a net-zero world by 2050. For 2030, the focus is on encouraging GPs to set a CO2 reduction target aligned with the Paris Agreement and to establish a verifiable strategy. As we move towards 2040, the focus will shift to the companies managed by these fund managers, requiring them to also adopt CO2 reduction targets aligned with the Paris Agreement. To achieve this, we employ various tools, including thematic engagement.

Behavior change through dialogue

Thematic engagement involves having constructive dialogues to achieve (behavioral) change, in this case focusing on our net-zero ambition. On behalf of PFZW, we engage with and support the managers of the funds in which we invest. Our goal is to drive changes that positively impact society or the environment or help reduce negative effects. These dialogues can take various forms—written, in-person, or over the phone—and typically address policies and activities. In 2024, Private Equity, together with APG and AlpInvest, engaged with American GPs through a webinar and a workshop.

Where do the GPs stand now?

Through a GP Paris Alignment Assessment, we monitor the steps our GPs are taking towards net zero. Last October, we established a baseline, and this year, our GPs were reassessed. The results clearly show that smaller GPs in the United States are lagging behind their European peers. This is understandable: smaller GPs often have fewer resources and less expertise. They also tend to invest in smaller companies, which similarly face resource and knowledge constraints. Additionally, climate-related legislation in the U.S. lags behind Europe and varies significantly between states. While we may be aiming for net zero, a co-investor in Texas might say, ‘I don't care about the climate’. Sometimes, there are fifty or more investors, each with different priorities. This makes it challenging to encourage GPs to set reduction targets aligned with the Paris Agreement.

Fortunately, there is growing regulatory pressure and increasing customer demand, which will help us push GPs towards net zero.

What We Plan to Do

In addition to no longer investing in companies that fail to meet PFZW’s minimum standards (such as those involved in tobacco or controversial weapons), GP selection (for new funds) and engagement (for existing funds) are the key tools we use in Private Equity. In 2025, we will continue these dialogues and intensify them where necessary. We will also keep hosting webinars and workshops.

At the start of 2025, GPs will receive their individual results from the GP Paris Alignment Assessment, showing how they compare to our total portfolio and to their peers. We hope this will motivate them to take action.