ESG Knowledge Hubs

Climate and Net Zero

The BVCA supports the objectives of the Paris Agreement and welcomes the commitment from the UK and a growing number of major economies to achieve Net Zero by 2050. The BVCA is actively encouraging the PE and VC industry to sign up to initiatives such as iCI, SBTi, IIGCC and Ceres. Via developing and sharing best practice and guidance specific for private capital, these initiatives are supporting private capital to work with their portfolio companies to reduce their carbon emissions, set science-based targets and secure sustainable investment performance by recognising and incorporating the materiality of climate risk. Further detail on the role of private equity and venture capital can be found here.
 

Additional Resources

• Initiative Climat International (iCI) and industry guides – Helpful guides for the industry produced by iCI covering TCFD, accounting for and reporting on Greenhouse Gas emissions and setting science-based targets.
   

• Net Zero Investment Framework component for private debt – The Institutional Investors Group on Climate Change (IIGC) has released a Net Zero Investment Framework (NZIF) for private debt.
  
  The NZIF provides guidance for asset owners and managers to align their portfolios with net zero emissions by 2050, focusing on decarbonisation at the borrower level in the private debt market.
   

• Net Zero Investment Framework Component for the Private Equity Industry – A framework produced by IIGCC for private equity investors to help provide a consistent foundation for asset owners and managers to align portfolios with net zero emissions by 2050 or sooner.
   

• Valuing Carbon in Private Markets | Sustainable Markets Initiative – Guidance written by the Sustainable Markets Initiative Private Equity Task force (PESMIT) for private market investors on how to develop a framework to consider the incorporation of carbon, both cost and opportunity, into the entire investment decision-making process.
   

• FAQs on the Private Equity Sector Science-Based Target Guidance – FAQs on Guidance for Private Equity on setting Science Based Targets.
   

• Venture Climate Alliance – The Venture Climate Alliance is made up of a growing group of leading VCs committed to achieving a rapid, global transition to net zero or negative greenhouse gas emissions by 2050 or earlier.
   

• The Integrity Council for the Voluntary Carbon Market – The Integrity Council for the Voluntary Carbon Market (Integrity Council) is an independent governance body for the voluntary carbon market.
   

• Voluntary Carbon Markets Integrity Initiative – The VCMI is an international non-profit organization with a mission to enable high-integrity voluntary carbon markets (VCMs) that deliver real and additional benefits to the atmosphere, help protect nature, and accelerate the transition to ambitious, economy-wide climate policies and regulation.

Biodiversity

The growing threat to the nature of biodiversity loss, predominantly through climate change has been becoming increasingly apparent, pushing the issue high onto the agenda of the global community.

Action to attempt to combat this potential threat was put in place with the agreement of the Global Biodiversity Framework (GBF) at the UN Biodiversity Conference - COP 15 in December 2022, which included a commitment by 188 nations (including the UK) to the 30x30 target, a target to conserve 30% of the world’s land and ocean by 2030.

Private capital is becoming increasingly aware of the risks posed by biodiversity loss and the role that it can play in helping reduce and conserve the natural environment and is increasingly looking at ways to integrate biodiversity considerations into their investment approach.

Below are some links to emerging best practice guidance specific to the PE/VC sector on how to integrate biodiversity considerations into the investment process, in addition to the Task Force for Nature Financial Disclosures (TNFD) framework.
 

Additional Resources

• WBCSD’s TNFD pilot - World Business Council for Sustainable Development (WBCSD) – The World Business Council for Sustainable Development have run a pilot and reported a summary of the pilot member business experiences using the TNFD, including learnings, challenges, illustrative applications, and examples. The pilot provides guidance on the TNFD’s LEAP approach, using case studies, and disclosure recommendations.
   

• Private Equity | Sustainable Markets Initiative – A report produced by the Sustainable Markets Initiative’s (SMI) Private Equity Task Force to act as a resource for private equity firms at all stages of their biodiversity journey, and to facilitate conversation and learning.
   

• Integrating biodiversity into private equity | France Invest – A guide produced by France Invest to enable management companies to incorporate the issue of biodiversity into each stage of the investment cycle.
   

• The Taskforce on Nature-related Financial Disclosure – The Taskforce on Nature-related Financial Disclosures (TNFD) has developed a set of disclosure recommendations and guidance for organisations to report and act on evolving nature-related dependencies, impacts, risks and opportunities.
   

• The Science Based Targets Network (SBTN) – The Science Based Targets Network (SBTN) is a collaboration of leading global non-profits and mission-driven organizations working together to equip companies as well as cities with the guidance to set science-based targets for all of Earth’s systems.