The winds of change

The guide is aimed at both general partners and limited partners of private equity funds. It includes questions that LPs and their advisors can ask fund managers, as well as questions that GPs can ask of the management of their portfolio companies and target investments.

Among the questions that GPs are advised to ask when evaluating investment opportunities are whether the directors have considered whether increasing carbon costs and legislative changes will impact their market or competitiveness, and whether changes in agricultural growth rates will affect their access to resources.

LPs are encouraged to ask their GPs how they monitor climate-related issues at the portfolio level, and whether they hold portfolio companies accountable for complying with climate change regulation.

The guide also recommends that LPs ask GPs how they intend to look for investment opportunities created by climate change.

 “While publicly listed companies have long been required to disclose information relating to the potential impact of climate change on their business, the private equity community has not been obliged to research or communicate comparable information,” Peter Dunscombe, the group’s chairman,  said in a statement. “With legislation such as the [UK’s] CRC Energy Efficiency Scheme coming into effect as soon as April, this guide is a signal to the sector that now is the time to step up its attitude to climate change. ”