2020 TCFD REPORT
In our 2019 ESG Report, we announced our commitment to developing an actionable climate change strategy that reflects our capabilities and stewardship potential. Our goal is to develop a meaningful understanding of how the effects of climate change may impact our investments, and what we can do to build portfolio resiliency on behalf of our clients. Our business case for doing so is reparedness.
As such, and in adherence to the principle of collaboration, we organized our strategy in line with the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Established by the Financial Stability Board (FSB), the TCFD provides a valuable framework for evaluating and reporting climate-related risks, as well as the related governance issues that are essential to managing them. Users are encouraged to apply concepts of materiality analysis and forward-looking analysis to test the resilience of their business strategies. The framework also operates as a format to structure investor/corporate engagement on climate change.
The TCFD framework is supported by four pillars: Governance, Strategy, Risk Management, and Metrics & Targets. Our corresponding commitments are:
We will articulate our position on climate change and clarify oversight and management responsibilities for that position internally.
We will engage the senior investment team to have a meaningful discussion on the potential impact of climate change scenarios to our investment strategies.
We will engage with GPs on the adoption of the TCFD framework to assess and manage climate-related risks. As part of our ESG Scorecard and reporting, we will begin to capture data regarding adoption amongst GPs and use this knowledge to educate and lead the industry.
Metrics and Targets
We will support and collaborate with GPs on the identification of climate-related risks and target-setting for risk management.
Going forward, we commit to reporting on our progress annually. This is the first iteration of our TCFD reporting:
Disclose the organization's governance around climate-related risks and opportunities.
Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s business, strategy, and financial planning where such information is material.
Disclose how the organization identifies, assesses, and manages climate-related risks.
Metrics & Targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
As we set expectations for our managers on ESG and climate change, it is important to us that we also take responsibility for our own emissions as an organization. HarbourVest is a CarbonNeutral® company in accordance with The CarbonNeutral Protocol, the leading framework for carbon neutrality. Our offsetting program delivers finance to emission reduction projects, supporting the transition to a low-carbon economy. All projects are independently verified to assure emissions reductions are occurring.
To get deeper insights into how our Real Assets team is thinking about the rapid transformation in the power markets, please read this interview with managing director and team member Mike Dean in Institutional Investing in Infrastructure.
OPPORTUNITIES IN RENEWABLE ENERGY
HarbourVest is an active renewable energy investor, and we are optimistic on the secular growth and transformation currently occurring within this market. Over the last 12 months, through March 31, 2021, we have invested more than $110 million in renewable energy transactions, partnering with best-in-class managers to invest alongside them in transactions to facilitate liquidity solutions. HarbourVest provides managers the capital to extend their vehicles and further invest capital into renewable energy businesses with a platform for future growth.
The low-carbon transition is yielding exciting growth opportunities that meet both our sustainability and risk/return objectives. A great example of this is an investment we made at the end of 2020 in Alpha Trains, a complex secondary, single-asset transaction. HarbourVest was offered exclusivity on this opportunity and sourced the deal on a proprietary basis through our relationships in the European infrastructure market. In the following Q&A, London-based Real Assets team member Diego Jimenez explains our rationale for investing.
Diego Jimenez Principal, Real Assets