It guides private equity investors on how to align their strategy, management, transparency and governance practices, to achieve their decarbonisation goals.
Fullerton Fund Management (Fullerton) has partnered with the United Nations Development Programme (UNDP) to develop a Sustainability Management Framework to guide private equity climate investing in Asia, using UNDP’s SDG Impact Standards as a foundation. The framework offers private equity companies a roadmap to adopting practices that can help to accelerate their net zero goals.
In Asia, the environmental and commercial case for climate investments is compelling, with the addressable market size for green businesses in Asia targeted to reach over US$4 trillion by 2030[1]. Governments have made strong commitments to decarbonise their economies, and around $53.5 trillion of investments between 2020-2060 is required to meet the net-zero targets already announced[2]. There are significant investment opportunities ahead and private equity can play a pivotal role alongside public spending in bridging the funding gap.
Private equity investors are well-positioned to exert greater influence on portfolio companies over climate and sustainability issues. However, disclosure standards in the region are uneven and corporate disclosures remain lacking, particularly in emerging Asia. This poses challenges for climate investors who are looking to assess the material environmental issues, and their implications, for their investments.
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The Sustainability Management Framework guides private equity investors on how to integrate sustainability considerations and the sustainable development goals (SDGs)Â into their strategy, management, transparency and governance practices, to achieve their decarbonisation goals. Through the framework, climate investors can conduct a critical evaluation of the various possible investment practices and decide on the unique set of practices which aligns best to their investment mandates and stakeholders’ requirements.
“As an investor of private capital in Asia, we recognise that sustainability issues have considerable implications for a company’s investment value, particularly for private equity, which has a long investment horizon. With the launch of this Sustainability Management Framework with support from the UNDP, we are committed to integrating sustainability considerations in our private equity climate investments. More importantly, we hope to share this framework and insights from real-world case studies with our peers, to enable them to evaluate the relevant sustainability aspects required to optimise decarbonisation in the region,” said Huck Khim Tan, Deputy Chief Investment Officer and Head of Alternatives at Fullerton Fund Management.
“The private sector has a significant role to play in accelerating Asia’s decarbonisation, including in collaboration with and alongside efforts from actors in the public and multilateral domains. Recognising this, we are delighted to collaborate with Fullerton Fund Management to develop this Sustainability Management Framework, leveraging the UNDP’s SDG Impact Standards for private equity funds. This framework is useful for climate investors who are looking to align their internal practices and decision-making to achieve their decarbonisation goals,” said Haoliang Xu, UN Under Secretary General and Associate Administrator of the United Nations Development Programme.
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