Selin Bucak reported on The Private Equity Stakeholder Project’s analysis of the portfolios of 10 private equity firms over the past decade (Private Equity Propels the Climate Crisis: The risks of a shadowy industry’s massive exposure to oil, gas and coal) and its findings that there is a ‘persistent focus on fossil fuel assets’.
Wealth Manager, October 25, 2021: PE firms pour billions into fossil fuel despite ESG promises
Citywire Selector, October 14, 2021: PE firms pour billions into fossil fuel despite ESG promises
Bucak shared how the report highlighted several recent deals that show private equity groups have expanded their fossil fuel exposure, despite making commitments to achieve net-zero emissions and expanding ESG integration in response to investor demand.
Other conclusions from the report that Bucak highlighted included the need for investors, regulators and policymakers to require private equity firms to provide “full transparency on their fossil fuel holdings and the impacts of those holdings on the environment and on communities”:
“Given their massive fossil fuel exposure, private equity firms have an urgent responsibility to address the significant role they play in propelling the climate crisis, and must start being transparent about the financial and social risks of their continued exposure to the fossil fuel sector.”
Additionally, Bucak wrote how “the report pointed out that most investments in this segment have underperformed as they have been vulnerable to the transition to clean energy.”
A 2020 Cambridge Associates analysis of about 200 energy funds found that returns had fallen behind the broader private equity sector.
Bucak quoted from the report:
“Fossil fuels continue to dominate energy investments by private equity despite the efforts of individual firms touting their environmental, social, governance (ESG) investment strategies and appetite for renewables and the private equity industry trade group highlighting sustainable investments.”