Climate change strategy
HarbourVest has committed 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 – by preparing for disruptive outcomes while doing our part to limit warming and contributing towards an orderly energy transition.
The IPCC Sixth Assessment Report warns that the next few years are critical: limiting warming to around 1.5°C requires global greenhouse gas emissions to peak before 2025 at the latest and be halved by 2030. This requires extraordinary global collaboration from governments, policymakers, investors, industries and consumers – and urgency.
The report also states that clear signaling from governments and the international community is needed to close investment gaps in clean technologies, including a stronger alignment of public sector finance and policy.¹ HarbourVest signed the Global Investor Statement to Governments on the Climate Crisis in 2021, ahead of COP26 in Glasgow, which called on governments to strengthen their 2030 targets and strengthen climate disclosures across the financial system. The statement was signed by over 500 investors representing over USD $46 trillion in assets.
1 Climate Change 2022: Mitigation of climate change, third installment of IPCC’s Sixth Assessment Report, approved on April 4, 2022, by 195 member governments of the IPCC.
The Recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD) provide the framework for building consistent climate disclosures. We organized our climate change strategy in line with the four pillars of the TCFD.
Our corresponding commitments are:
Governance
We will articulate our position on climate change and clarify oversight and management responsibilities for that position internally.
Strategy
We will engage the senior investment team to have a meaningful discussion on the potential impact of climate change scenarios to our investment strategies.
Risk management
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.
We commit to reporting on our progress annually. This is our second TCFD Report.
Initiative Climat International (iCI)
HarbourVest is proud to serve as the global coordinator for the iCI in 2022 and 2023, an important GP-led practitioner forum to build capacity, consensus, and resources on climate change risk analysis, emerging regulation, emissions disclosure, and target-setting.
Our ESG team lead Natasha Buckley co-chaired the iCI Carbon Footprint Working Group to deliver, in partnership with expert consultant ERM, the private equity standard on Greenhouse Gas Accounting and Reporting for Private Equity, which supports a consistent approach to calculating and disclosing on financed emissions. Targets can’t be set without data, and the iCI recognizes an urgent need to bring about consistency in how emissions data is accounted for in private equity. It is expected that this guidance will support transparency requirements driven by regulatory developments, LP requests, lenders, and other stakeholders. Most importantly, private equity can play a pivotal engagement role in getting private companies to accurately account for and manage their emissions at a critical stage in the company’s lifecycle. This guidance should support capacity-building and understanding, as well as support a consensus approach towards reporting on financed emissions within private equity.
As of September 2022, the iCI counted more than 200 members representing over $3 trillion USD in assets under management. The iCI also launched North America and APAC chapters in 2022, in addition to its original European base.