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1、Bridging the Divide:Private Markets and New Drivers of Value CreationW H I T E P A P E RN O V E M B E R 2 0 2 4Images:Getty ImagesDisclaimer This document is published by the World Economic Forum as a contribution to a project,insight area or interaction.The findings,interpretations and conclusions

2、expressed herein are a result of a collaborative process facilitated and endorsed by the World Economic Forum but whose results do not necessarily represent the views of the World Economic Forum,nor the entirety of its Members,Partners or other stakeholders.2024 World Economic Forum.All rights reser

3、ved.No part of this publication may be reproduced or transmitted in any form or by any means,including photocopying and recording,or by any information storage and retrieval system.ContentsForewords 3Executive summary 6Introduction 71 LP energy transition fund appetite and evolving value 9 creation

4、expectations 2 Financial and energy transition outcomes andvalue creation levers 133 Private equity:A detailed study 194 Infrastructure:A detailed study 265 Sustainability and commercial excellence transferability 30Conclusion 33Glossary 34Contributors 35Endnotes 37Bridging the Divide:Private Market

5、s and New Drivers of Value Creation2ForewordsThe global economy is at a critical juncture,facing the urgent need to transition to a low-carbon and more sustainable economy.Scaling existing solutions,increasing the deployment of more sustainable products and services,transforming and repositioning bu

6、siness models and building enabling technologies and infrastructure all require significant capital,commercial acceleration and operating capabilities.Private market investors,with a steadfast focus on long-term value creation,are well positioned to execute towards these goals while the companies th

7、ey successfully guide through this transition stand to reap the commercial rewards afforded by a more sustainable economy.Private markets unique investor governance model can be a significant engine for the transformation and the rapid scaling required throughout the economy to drive the energy tran

8、sition.Private equity and infrastructure investors have decades of experience working with portfolio companies on commercial and operational excellence initiatives.They have deep expertise in realigning business models,launching new and more profitable products and services,capturing pricing premium

9、s through better customer segmentation,expanding internationally,professionalizing management teams,improving procurement and achieving greater success from systematic mergers and acquisitions(M&A).These capabilities,among others,are fundamental to the industrys continuous search for value and,in th

10、at vein,should be further employed towards the objective of decarbonization.Unlike many public equity investors,private market investors and their portfolio companies can afford to be more patient.They are more willing to transform businesses to capture industry-specific sustainability tailwinds whi

11、le aggressively accelerating growth in new and existing sustainable product and service segments.Theyalso support management teams in achieving these goals by aligning executive incentives in ways that are generally unavailable topublicly traded companies.Private market investors are not passively w

12、aiting for opportunities to become obvious.They invest with impact at the earliest stages of transformative trends to achieve maximum benefit,and this proactive approach must now unlock the value embedded in sustainably focused themes such as energy transition,the circular economy and natural capita

13、l.In doing so,private market investors can leverage their prior experience with similar businesses while partnering with management teams to ensure that improved sustainability forms a core part of value creation plans.We are encouraged to see the level of capital that has been allocated over the pa

14、st few years to energy transition funds by limited partners(LPs).However,simply investing in new renewables capacity,while necessary,will not ultimately be sufficient to achieve the level of decarbonization that the planet requires and end markets increasingly demand.Thankfully,general partners(GPs)

15、are leveraging their commercial and operational Bridging the Divide:Private Markets and New Drivers of Value CreationNovember 2024Allyson Tucker Chief Executive Officer,Washington State Investment BoardKaterina Labrousse Head,Investor Industries,WorldEconomic ForumMark Benedetti Executive President,

16、ArdianBridging the Divide:Private Markets and New Drivers of Value Creation3excellence across a broad array of sectors within private equity and real assets to address the diverse set of priorities from customers seeking more sustainable products and solutions.We have also seen a greater willingness

17、 among investors to“go where the emissions are”and decarbonize power generation and heavy industry,where the risk/return profile can be even more attractive.Despite these positive trends,our industry still needs to go further in harnessing the operating capabilities that sit within GPs to deliver be

18、tter sustainability and decarbonization outcomes.These teams collective expertise and capacity represent one of the greatest collections of corporate value creators in the world.They can deliver growth and scale in ways that public markets typically cannot.This will not only drive greater success fo

19、r existing funds but also give LPs greater confidence in allocating capital to ever larger energy transition funds,secure in the belief that their managers are taking a systematic approach to evaluating,sizing and capturing the commercial opportunities the energy transition is unlocking.Lord John Br

20、owne ofMadingley Chairman and Co-Founder,BeyondNetZero,General AtlanticFrancesco Starace Partner,EQTWe both joined the private markets sector having previously led large,publicly traded and diversified energy companies and with an ingrained understanding that the industrial transition pathway to net

21、 zero is a gradual process that takes time and requires significant investment.Addressing the challenge of transitioning global economies to net zero will require close collaboration between the public sector and private businesses.Private markets,which are expected to continue to grow by 12%annuall

22、y over the next decade,1 are key to unlocking global growth and prosperity by addressing the vast investment needed to develop environmental,social and economic resilience for the benefit of all.In fact,most capital in global markets is formed through private markets.It is worth reflecting on where

23、private capital has potential strengths to drive a lower-carbon economy.Importantly,private markets governance model has some clear advantages over investors in public equities when it comes to delivering a decarbonization agenda.Investors can bring resources,wide networks of advisers from industry

24、and aligned incentives to management teams.The private markets ownership model,whereby firms typically exercise majority control of their portfolio companies,allows for a long-term perspective in supporting businesses to address environmental challenges by growing the businesses,improving their oper

25、ations and offering relevant solutions through their products and services.Having made our own career transitions into private markets,to firms with ambitious climate agendas spanning asset classes,our focus has now turned to applying our industry experience to help private capital advance the trans

26、ition.This means making the most of the active ownership model that we believe to be private capitals strength.Practically,this involves harnessing the ability to ensure alignment and accountability around the sustainability agenda with portfolio company boards and leadership,setting ambitious but a

27、chievable and,importantly,quantifiable targets.Managers of large portfolios spanning hundreds of companies have the platform to pioneer sustainability initiatives,cross-pollinate their portfolios,apply key learnings and scale success.Like other businesses,companies in transition-related industries c

28、an benefit from private capital investors help in sourcing and executing complex M&A strategies.Investors can play an important role in supporting companies through the complex integration of an energy transition-focused transformative merger,the build-out of new platforms or developing entirely new

29、 product and service offerings.This helps companies grow faster,capture more market share and become early movers in the fast-evolving energy transition segment.Private equity and infrastructure investors have long track records of doing this successfully to help accelerate growth.But while private

30、markets have grown significantly,they still have a long way to go.BloombergNEF estimates that achieving net zero by 2050 is a$200 trillion investment opportunity.2 The opportunity for private capital lies in understanding the trend at a granular level and having the competence to develop and operati

31、onally improve companies.Undertaking this work will benefit private capital firms and their companies valuations,improve the availability of scaled investment opportunities and deliver on societys broader decarbonization goals.Bridging the Divide:Private Markets and New Drivers of Value Creation4The

32、 key risk is effectively the inverse of that:not fully understanding the dynamics and developing the operational capabilities but rather approaching the transition purely from a financial mindset.In working towards net zero,managers need to refine their investment themes and ongoing commercial susta

33、inability work with companies to appropriately address the investment gap and benefit from sustainability tailwinds.This requires meaningful efforts to build a quantified business case,develop operational proof points and have a robust point of view on how sustainability can support the future growt

34、h plans of their company,while remaining close to its core business.Investors have many hidden jewels in their portfolios on which they have yet to capitalize in a strategic way.This risks leaving value on the table.Firms in the private markets sector can demonstrate why a particular growth strategy

35、 within the energy transition environment could drive outsized returns for a company and its investors.Forward-looking management teams can work with sponsors to build a new market segment,move into a new area of business that a future investor would view as highly attractive or develop a potential

36、platform that will be a category leader.Firms such as ours look for deals with those characteristics and believe that the appetite for them will continue to increase in the comingyears.There should be no question that the transition to net zero is one of the most important issues for society in the

37、decades to come and,if well understood by investors,can create significant opportunities for value creation.In this context,what will set successful managers apart is the ambition and ability to develop companies and position them to play a meaningful part in the future economy,during and beyond pri

38、vate capitalownership.Bridging the Divide:Private Markets and New Drivers of Value Creation5Executive summaryPrivate markets energy transition funds and quantified top-and bottom-line sustainability value creation levers in private equity and infrastructure general partner(GP)portfolios have both gr

39、own and matured rapidly.Dedicated vehicles are being raised more quickly,and portfolio operations and sustainability teams inside many GPs are working together more than ever before.However,some GPs struggle to develop sustainability and energy transition-focused investment themes for their flagship

40、 funds.In addition,because many have not tried in the past,some GPs face challenges executing on sustainability value creation initiatives with robust and quantified business cases for companies and tracking their implementation.This has implications for the whole investment life cycle,including exi

41、ts.The good news is that the industry can learn from the playbooks and capabilities that the GPs profiled here and others have built.GP sector investment teams can develop themes around sustainability tailwinds in a similar manner to the way in which they would approach other themes.The market analy

42、sis and insights workare the same.Many GPs already have theoperating partners and associated capabilities to operationalize this work.They know how to partner with management teams to scale companies rapidly,reposition business models,enhance sales and marketing,optimize pricing and drive operationa

43、l effectiveness.Much like other successful initiatives to unlock value in private markets,the key is creating the most effective structure with the right focus,people andresources.It will be crucial for more GPs to see portfolio companies generate quick and medium-term wins focused on revenue growth

44、 via their sustainability efforts.Also vital is for them to increasingly develop investable proof points that are communicated and quantified as part of the equity story and realized at exit to support the maturing of the market.The substantial capabilities for value creation that sit inside private

45、 market GPs will be key to unlocking greater capital flows,and even more growth,from sustainability value creation in the future.Private markets hold great potential for unlocking value linked to sustainability andthe energy transition.Bridging the Divide:Private Markets and New Drivers of Value Cre

46、ation6IntroductionBusinesses advancing sustainability,circularity and the energy transition will benefit from partnering with private market investors.The private markets governance model aligned incentives,strong management partnerships,effective boards and long-term investment horizons has driven

47、rapid company growth around the world.3 GP portfolios focus on commercial excellence,operational effectiveness,performance tracking and investor alignment leads to faster,more informed decision-making.4 Combining those governance and operational capabilities with capital for organic growth and growt

48、h via M&A,along with extensive transaction expertise,has made private markets a fertile ground for rapidly scaling new business models.These capabilities are especially valuable for companies advancing the energy transition,the circular economy and nature-focused solutions,or those that could do thi

49、s through near adjacencies.Investment in the energy transition hit a record$1.8 trillion in 2023,climbing 17%from a year earlier.5 Private capital is increasingly playing a larger role in that total.Until recently,sustainability considerations were not key purchasing criteria for most large corporat

50、e purchasers.New regulations,heightened investor scrutiny and rising customer demand for transparency and responsibility in supply chains has changed that.Amazons 2024 State of Procurement Report highlights that,“Despite the fact that nearly six in 10 respondents have mandates for sellers that follo

51、w sustainable practices and many more would like to purchase from these sellers even if not required 85%of respondents say the difficulty of sourcing suppliers who follow sustainable practices prevents their company from setting or achieving sustainability goals for procurement.”6 Similarly,a recent

52、 Bain and Company report of 500 business-to-business(B2B)buyers and sellers found that sustainability is“now one of corporate buyers top three purchasing criteria,and 36%say they would leave suppliers that dont meet sustainability expectations.Nearly 60%say they will be willing to do so three years

53、from now.”In addition,the report found,“nearly 50%of corporate buyers said they would pay a sustainability premium of 5%or more today,and they expect their willingness to pay to increase in the future while 85%of suppliers say they embed some degree of sustainability in their products and services,o

54、nly 27%consider themselves very knowledgeable about their customers sustainability needs”.7 Private markets portfolio companies,supported by their GPs,are well positioned to meet this demand by integrating sustainability into their go-to-market strategies.Many are doing exactly that today and,in doi

55、ng so,are expanding portfolio companies total addressable market,pricing realization and customer share-of-wallet.Combining governance and operational capabilities with capital for organic growth and growth via M&A,along with extensive transaction expertise,has made private markets a fertile ground

56、for rapidly scaling new business models.7Bridging the Divide:Private Markets and New Drivers of Value CreationB2B suppliers are not consistently meeting their customers sustainability needsFIGURE 1100%011%23%15%Not considered at allConsidered,but no impact on product Started to implementEmbedded in

57、design and innovation Developed some products Integrated in all products36%14%1%85%of suppliers are embedding sustainability in their products and services to some extent.but only about half of customers say sustainable options address all dimensions of their expectationsAgree53%Indifferent26%Disagr

58、ee21%100%011%23%15%Not considered at allConsidered,but no impact on product Started to implementEmbedded in design and innovation Developed some products Integrated in all products36%14%1%85%of suppliers are embedding sustainability in their products and services to some extent.but only about half o

59、f customers say sustainable options address all dimensions of their expectationsAgree53%Indifferent26%Disagree21%Note:Excludes“I dont know”responses.Source:Bain&Company.(2024).The visionary CEOs guide to sustainability 2024.https:/ rise of large impact and energy transition funds has also introduced

60、 discerning new buyers with significant capital into the market.This has caught the attention of companies in traditional private equity and infrastructure portfolios looking to attract these investors and broaden their investor base.8 In addition,GPs are increasingly investing in companies with sus

61、tainable business models,viewing this segment as attractive due to strong tailwinds and favourable exit dynamics.As a result,portfolio companies are collaborating with sponsors to build operational sustainability proof points,improve their marketing positioning and enhance their growth profiles at e

62、xit.In response to these trends,many GPs have promoted collaboration between operating teams and sustainability professionals,developing playbooks to drive sustainability-driven value creation.They have created case studies and identified repeatable processes,showing that familiar value creation lev

63、ers can be applied whenworking with a sustainability vision.Bridging the Divide:Private Markets and New Drivers of Value Creation81LP energy transition fund appetite and evolving value creation expectations There is strong LP demand for funds focused onclimate solutions and sustainability.The contin

64、ued need for collaboration among sustainability professionals and operating and investment teams is not only a market response but a response to clients as well.The surge in LP demand for energy transition funds is an accelerating trend.Since the 2023 World Economic Forum white paper Private Markets

65、 Impact Investing:A Turning Point,LPs have significantly increased their commitments to energy transition and climate solutions,marking a profound industry shift.The California Public Employees Retirement System(CalPERS),9 the New York State Common Retirement Fund,10 the Oregon Public Employees Reti

66、rement Fund11 and the Dutch pension fund APG12 all announced significant new or increased commitments to sustainable investments in private markets in the past year.Other notable LPs that have publicly discussed climate investing allocations include the California State Teachers Retirement System(Ca

67、lSTRS),the Canadian pension investment group CDPQ,the Border to Coast Pensions Partnership,the NN Group,PGGM,the Universities Superannuation Scheme(USS)and Public Sector Pension Investment(PSP),among many others.13 Despite varying criteria among LPs for what constitutes an energy transition or clima

68、te solutions investment,demand for these fund products is clearly on the rise.The industry is also seeing a meaningful increase in the number of LPs forming new energy transition and impact sleeves.More significant is the growing number of LPs making their first or second commitments to energy trans

69、ition funds,despite not yet forming dedicated sleeves,highlighting the industrys growth trajectory.The most time-consuming step for LPs is making their first energy transition fund investment,due to extensive upfront research on the market,the wide range of fund offerings,risk/return profiles and ot

70、her important criteria.After they cross that initial threshold,subsequent allocations become easier.Active LPs in this space have also been seeing increased rigour and range of GP practices with regard to how they use portfolio operations teams to create value for companies with energy transition an

71、d climate offerings.According to Therse Lennehag,Head of ESG Advisory EMEA at the UBS Investment Bank,“The amount of capital and dedicated funds available in public and private markets for these kinds of investments has grown tremendously since 2021.The sophistication level of these investors,and th

72、eir demands for transparency and quantified commercial impact business cases paired with the equity narrative,hasalso increased.”14Many LPs are observing how GPs use commercial acceleration and GTM capabilities to highlight companies sustainability profiles.They are increasingly focusing on how GPs

73、quantify the business case for sustainability in value creation plans,ensuring companies practise what they preach on sustainability and decarbonization.The Institutional Limited Partners Association also recently updated its GP ESG Assessment Framework,codifying many of these GP practices into the

74、industry standard for how LPs assess GPs15 and released a handbook for LPs that are newer to decarbonization-focused GP engagement and monitoring.16As Lennehag of UBS observes,“Many impact and energy transition investors are not only selling superior risk-adjusted returns to their clients.They are a

75、lso selling environmental and social outcomes alongside those returns,and they need to demonstrate this credibly to their clients.So companies need to be able to demonstrate that their offerings are not just making carbon reduction as an example;they need to have the life-cycle assessment and other

76、data to support their claims and support alignment to sustainable finance taxonomies.Investors and their buy-side bankers engage with this data and evaluate it extensively when conducting due diligence.There needs to be substance.”17Sophisticated energy transition GPs are leading the way in driving

77、sustainable revenue in key sectors,showing how the private markets governance model and portfolio operations teams can accelerate and scale companies opportunity capture from the transition to a lower-carbon economy.Significantly,agrowing number of LPs are making their first or second commitments to

78、 energy transition funds,despite not yet forming dedicated sleeves,highlighting the industrys growth trajectory.Bridging the Divide:Private Markets and New Drivers of Value Creation9AP6(the Sixth Swedish National Pension Fund)has taken note of the substantial development of private equity impact and

79、 energy transition investment opportunities over the past few years.This is the background to AP6s recent detailed study of the private equity impact market,which concluded that tailwinds in many different markets are apparent.As part of the study,AP6 spoke to many LPs around the world about their a

80、pproaches and views of this market.While many of the LPs that have been investing in these funds for some time have firm views on metrics they like to see and definitions of different types of impacts and energy transition outcomes,at a market level there is still some confusion and a lack of clarit

81、y yet to be addressed on both the LP and GP sides.Based on conversations with LPs,AP6 estimates that for every LP investing in these funds today there are 10 who are taking a“wait-and-see”approach.While many LPs may have investments in impact or energy transition funds today,their allocations to tho

82、se funds may not have been made as part of a direct commitment to investing a certain amount of capital into funds with such specific characteristics.Most LPs favour an“opportunistic”investment strategy when it comes to impact,with inherent flexibility.While some funds in the impact and energy trans

83、ition space are on Fund II or Fund III,many are still at Fund I stage.Looking ahead,AP6 believes that as these funds build up track records over 1020 years,there will be more fund capacity,and as GPs continue to raise and deploy capital,more LPs will begin allocating more to such strategies,whether

84、as part of a dedicated allocation or through an opportunistic approach.In addition,as LPs begin to express more interest in these funds,ask difficult questions,scrutinize methodologies and results and ultimately develop conviction,the market will mature even further.These developments should lead to

85、 more impact and energy transition outcomes over the coming decade.Considering the underlying megatrend of sustainable transition,opportunities to createfinancial performance should be ample.AP6 notes that the vast majority of GPs raising funds are highly committed to the quality of their impact and

86、 energy transition funds,and this shows in their investment processes.Impact and energy transition investing is complicated.It requires established GPs to have more of a commitment and to collect more data than any traditional buyout or growth equity fund to establish the requisite credibility and s

87、uccessfully raise capital.AP6 is less concerned about greenwashing in that context although there is always a risk of greenwashing,just as there is a risk of overmarketing investment products in general.What is important for AP6 in relation to due diligence of impact and energy transition investment

88、 opportunities is to understand the impact proposition.This is in addition to standard commercial,financial,legal,operational and environmental,social and governance(ESG)due diligence developing the conviction that the GP is going to drive impact and energy transition outcomes in a way that AP6 can

89、understand and agree on in the future.In AP6s words,they should tinker with the concept of“impact quality”,including clear methodology and process as well as measurable impact outcomes,and any investment in impact would have similar or higher return expectations as the primary objective of the state

90、 pension fund to create long-term high returns for the Swedish pension system.In the past couple of years,AP6 has also observed that more traditional private equity GPs are investing every year in companies with impact and energy transition tailwinds associated with them in their fund platforms beca

91、use they are attractive investments with strong secular benefits supporting them.As a result,LPs will gain more exposure to these types of investments and are increasingly likely to see the benefit of having this kind of exposure in the future,whether as part of their traditional flagship funds or t

92、hrough dedicated vehicles.CASE STUDY 1AP6 Bridging the Divide:Private Markets and New Drivers of Value Creation10After setting and achieving an initial target for doubling climate solutions investments by 2021,the five New York City pension funds increased their ambition with an aim to invest$50 bil

93、lion in climate solutions by 2035.Three of the pension funds(Teachers Retirement System of the City of New York TRS,the New York City Employees Retirement System NYCERS and the Board of Education Retirement System BERS,collectively“the systems”)adopted goals in 2021 to achieve net-zero emissions thr

94、oughout their portfolios by 2040 and formally incorporated their climate solutions investment goals in these plans.As part of the work they have been doing in private markets,the systems continue to explore prudent climate solution opportunities,including funds that involve exposure to climate solut

95、ions within their strategies as well as thematic energy transition funds.They have even begun to evaluate re-ups to GP energy transition funds where they had allocated to the first fund in the series.In addition,the systems have set an aspirational goal for 100%of new private funds by 2025(NYCERS an

96、d BERS)or 2026(TRS)having net-zero goals,science-based targets or other appropriate decarbonization goals.The systems have begun monitoring progress of GPs in this area more closely over the past two years.They will be sharing with system trustees how each manager is continuing to increase their mat

97、urity and sophistication vis-vis climate change.The systems will be conducting discrete ongoing engagement with GPs to ensure continued progress.While some North American GPs have not been making public statements of commitment,TRS,NYCERS and BERS have seen progress,willingness and work being done b

98、y US-based GPs to increase their integration of climate considerations into their investment process.The systems have seen first-hand how GPs are creating decarbonization playbooks and developing the internal capabilities to work systematically with portfolio companies on decarbonization roadmapping

99、,target-setting and driving top-and bottom-line growth at company level.The systems have heard from GPs that portfolio company customers continue to drive more awareness and ambition from companies and that more companies are seeing the commercial benefits of decarbonization.The systems are also see

100、ing GPs efforts to drive additional value from company decarbonization work when they look to exit investments.As the systems continue to act with their GPs to prudently increase their ambition related to climate,the systems expect to see GPs in their manager base as well as the broader market conti

101、nue to mature in this area.The number of scaled climate solutions fund products with track records throughout private markets asset classes will also provide the systems with more opportunity to allocate capital as they work towards achieving their 2035 climate solutions investment goals.CASE STUDY

102、2New York City pension funds Bridging the Divide:Private Markets and New Drivers of Value Creation11The Washington State Investment Board(WSIB)s investment approach to the energy transition has evolved over the past few years.While the fund does not have a formal target allocation level that it need

103、s to hit,it remains bullish on the tailwinds and associated risk/return profiles of many energy transition-focused funds.The fund is also observing an increase in opportunities to invest in companies that aid in global decarbonization through funds not specifically labelled as transition or impact f

104、unds.Private equity-backed energy transition funds have been growing in size and quality in recent years.In 2023,the fund committed more than$1 billion to impact and energy transition funds.The fund has been particularly attracted to industrial decarbonization and broader brown-to-green strategies,d

105、riven by its strong belief in their potential.These opportunities allow the fund to allocate to funds that“go where the emissions are”and where the most attractive risk-adjusted returns can be achieved.The funds confidence is further bolstered by the presence of GPs with strong portfolio operations

106、and value creation capabilities,which are particularly well positioned to drive transformational change,given the benefits of the private markets business model.The WSIB believes that funds in these strategies are best positioned to capture higher multiples at exit.The fund sees its GPs doing cataly

107、tic decarbonization work and making meaningful changes to the business models and revenue mixes of those brown-to-green assets while proactively managing negative ESG externalities.This level of transformation is far more challenging to achieve in public markets where the fund has less influence.Thi

108、s is part of the inherent attractiveness and value proposition that private market GPs bring to drive the scale and velocity needed to meet the challenge of the energy transition.Rather than build out a separate team focused on climate-related investments,the WSIB has been focused on providing all i

109、nvestment staff with the education and training needed to assess GPs and funds approach to the energy transition,including which transition themes are most compelling from an investment perspective.Formal sustainability education sessions are offered quarterly and required for investment staff.The W

110、SIB has also built out an ESG Learning Library with a resource section dedicated to climate.CASE STUDY 3The Washington State Investment Board Bridging the Divide:Private Markets and New Drivers of Value Creation122Financial and energy transition outcomes andvalue creation leversCapital and operating

111、 capabilities are funding and accelerating sustainability-driven business transformations that deliver commercial success.While energy transition investing via dedicated vehicles is still relatively new,it is rapidly gaining traction.18 This also applies to theme development paired with sustainabili

112、ty and decarbonization value creation.A recent McKinsey analysis shows that“growing demand for net-zero offerings could generate more than$12 trillion of annual sales by2030”.19Eleven high-potential value pools that could have a yearly revenue of more than$12trillionby 2030FIGURE 2IndustrialsSteelAl

113、uminiumCementMiningChemicalsCarbon managementCarbon capture,utilization and storageCarbon-offset marketsCarbon tracking and measurementHydrogenProductionTransmissionEnd useAgriculture and land useLand and forest managementAgricultural productionAlternative proteinsFood waste reductionSustainable agr

114、icultural inputsSustainable agricultural equipmentWaterMunicipal water supplyIndustrial water supplyWasteEnablers of materials reuseIndustrial-and mature-materials processingMaterials-processing innovationOil,gas and fuelsElectrification of upstream and downstream Efficiency improvementsDirect emiss

115、ions elimination Sustainable fuelsConsumerConsumer electronics Sustainable packaging Sustainable fashionPowerRenewable-power generationGrid modernization and resiliencyFlexibility and energy storagePower system tech and analyticsDecommissioning and thermal conversionTransportElectrificationMicromobi

116、lityInfrastructure for electric vehiclesSustainable aviationBuildingsSustainable design,engineering and construction advisoryGreen building materialsHigh-efficiency equipment Green building tech/operations1002002503003004006508506501,1505501,2008501,2001,1001,2001,0001,5001,3001,8002,3002,700Address

117、able market size in 2030,selected categories,$billionNote:Preliminary,not exhaustive.Source:McKinsey Sustainability.(2022,April 13).Playing offense to create value in the net-zero transition.https:/ Bridging the Divide:Private Markets and New Drivers of Value Creation13Leading energy transition inve

118、stors have seasoned portfolio operations teams with a strong track record in driving commercial excellence.They support companies with new product launches,better customer segmentation,pricing optimization to capture sustainability premiums,market expansion,access to talent and brand repositioning.2

119、0 They have also supported environments in which operations teams and sustainability teams work hand in hand on these topics.According to Maximilian Meyer,Executive Director in J.P.Morgans Sustainable Solutions Group,“The market analysis,pricing studies and customer insights work we have seen around

120、 customer willingness to pay a sustainability premium has been evolving rapidly over the last few years.The tide has been shifting.The market studies we have seen,within a growing list of sectors and customer end markets,have shifted as customer commitments take hold and get closer to 2030 targets.”

121、21 GP portfolio operations teams spearheading this work are also expected to continue to grow in size and importance in the coming years,with sustainability identified by GPs as a key area for growth and capacity-building.22 Given how GPs scale companies via M&A,they can unlock opportunities that ma

122、y be harder for strategic acquirers to execute.A recent BCG analysis found that green M&A creates incrementally more value than non-green M&A.“The median of environmental-related transactions is significantly higher than that of nongreen deals.And over the longer term,the median two-year Relative To

123、tal Shareholder Return of green deals exceeds that of nongreen deals.”23 Many GPs proactively seek out companies for sustainability-driven transformations,presenting management teams with quantified business cases early in due diligence to enhance business models and drive revenue from sustainable,c

124、ircular or nature-focused offerings.A number of large GPs in North America and Europe,via the Private Equity Sustainable Markets Initiative,recently released industry guidance on doing exactly that,entitled“Valuing Carbon Pre-Investment”.It included information on how to assess the potential to enha

125、nce business models and offer more decarbonized products andservices.24 Leading energy transition investors support companies with new product launches,better customer segmentation,pricing optimization to capture sustainability premiums,market expansion,access to talent and brand repositioning.Bridg

126、ing the Divide:Private Markets and New Drivers of Value Creation14Building on the Private Equity Taskforce of the Sustainable Markets Initiative(PESMIT)s existing carbon valuation framework with practical guidanceFIGURE 3Overview:Carbon valuation framework componentsExtended carbon valuation framewo

127、rk componentsAC1C2C3C4BCDECarbon-adjusted cash flowsCarbon-adjusted multipleRegulated carbon costsDecarbonization costs/savingVoluntary carboncosts1Sustainability-linked financial instrumentsSustainable growthInternal carbon costsIndirect carbon impactsDecarbonization value creationCarbon-adjusted m

128、ultipleCosts imposed by regulation on a specific sector in a geography that result in actual cash outflow(e.g.via ETS,carbon tax)Regulated priceRelevant asset-level emissionsxSelf-imposed costs based on self-assessed view of carbon prices(e.g.price set by firm or portfolio company to achieve net-zer

129、o targets)Incremental costs or benefits incurred as a result of the relative carbon footprint,can be driven by revenue(e.g.higher/lower customer demand)or costs(e.g.higher/lower financing costs)Reduction in regulated and internal carbon costs and increase in indirect carbon benefits from pursuing de

130、carbonization actions(e.g.adding solar to reduce footprint)Self-imposed adjustment in valuation multiple at exit when exit EBITDA does not reflect carbon-related future growth and earnings risk(e.g.future carbon prices/decarbonization strategy not reflected),based on self-assessed view of the specif

131、ic context of a given business and its environmentConsider impact of not meeting customer climate demands and review integration of sustainable growth options into value creation planning during the hold periodInternal carbon priceRelevant asset-level emissionsxRevenue impactCost impactBCA+Existing

132、PESMIT valuationcomponentsAEExisting PESMIT valuationcomponentsC 14Interest expense for traditional financial instrumentsInterest expense for sustainability-linked financial instrumentsxPrice of carbon creditResidual asset-level emissionsCAPEX of reductionOPEX reductionNote:1.Costs to address the im

133、pact of a companys unabated emissions,by investing in high-quality carbon credit portfolios that are aligned with their short-and long-term mitigation strategies.Firms can decide whether,and the extent to which,they might participate in the voluntary carbon markets,i.e.non-regulated carbon markets,a

134、s part of their overall decarbonization approach.Source:ERM.Sustainability Markets Initiative.(2024).Valuing carbon pre-investment.Private Equity Sustainable Markets Initiative(PESMIT).https:/ the Divide:Private Markets and New Drivers of Value Creation15In addition,according to Meyer of J.P.Morgan,

135、“The rise in fundraising for private markets climate and impact funds has been accelerating substantially.At the same time,there are also GPs who do not currently have dedicated vehicles but are nevertheless targeting and prioritizing investments in businesses with aligned business models or more su

136、stainable products and services across different sector teams and themes.They are making those investments out of their flagship funds and are undertaking similar work during ownership and in the run-up to exit and other sell-side transactions.Those GPs are proactively targeting these types of compa

137、nies given the powerful tailwinds behind sustainability and decarbonization.”25 When TPG was launching its TPG Rise Climate fund,the leadership deliberately structured a suite of value creation capabilities that would uniquely support Rise Climate companies.They carefully assessed the skills and ini

138、tiatives that would be most beneficial for companies in the Rise Climate portfolio.On the basis of experience gained from pioneering private equity impact investing,TPG understood that these companies would share growth characteristics and company stage with those in their TPG Growth(growth equity)a

139、nd TPG Capital(private equity/buyout)portfolios.However,it also recognized that many companies in which it would be investing would be more operationally complex,have even more robust capital needs in some cases and might not be profitable at entry.TPG has had a portfolio operations group for more t

140、han three decades;it is one of the longest-tenured teams in the industry.The firm has a long track record and set of capabilities that it brings to portfolio companies in partnership with management teams across the TPG platform.Those capabilities help portfolio companies with GTM and salesforce eff

141、ectiveness,pricing,customer insights and segmentation,digital transformation,brand and communications,human capital,operational effectiveness,international expansion,procurement,material ESG considerations and M&A and capital markets expertise,among other areas.Companies are often attracted to Rise

142、Climates capital because of the business-building capabilities that come along with it,as well as the expertise,guidance and support from the TPG Ops team to capture the green premiums customers are willing to pay for existing or new products and services they are taking to market.They may need supp

143、ort to shift their business models and understand customer pain points;to better map the entire customer journey from top-of-funnel through to cross-sells and renewals;and to enter new markets and deeply understand customer decarbonization-focused purchasing criteria so they can capture greater shar

144、e-of-wallet from existing customers and win new customers.TPG works with its companies to undertake marketing,research and development(R&D),market and pricing studies,fast market experiments and articulation of the customer value proposition for these new climate solutions to ensure they can be succ

145、essful in the market quickly and sustainably.The firm has also brought its expertise to bear to accelerate and unlock more significant decarbonization across its Rise Climate portfolio through its experience with carve-outs and other complex transactions.It has a long track record of working with la

146、rge corporates around the world to either carve out divisions completely or partner with those corporates to spin out and scale these standalone decarbonization companies jointly.TPG can provide similar expertise in other complex transactions involving transformative M&A,take-privates or setting up

147、and scaling of brand-new platforms.In those contexts,the firm looks to take advantage of,for example,the sustainability profiles and strengths of two merged businesses to drive synergies and make the most of the companys new decarbonization value proposition in the market.They do this by driving cro

148、ss-sells and up-sells throughout the new combined companys existing customer base and capturing the white-space opportunities that these types of transactions can unlock.As part of company exit preparations,TPG Rise Climate has already seen this play out in past exits.The firm and the management tea

149、ms have made concerted efforts to ensure that sustainability is at the core of each companys equity story.The firm plans to do the same for other businesses in the portfolio,whether the exits are via an initial public offering(IPO)or an auction process for strategic and financial buyers.It has seen

150、the business environment mature and the capital available for these opportunities grow exponentially.Companies now need to go much further than they would have done five years ago to ensure they are optimally positioned to meet the investment criteria of this fast-growing pool of potential buyers.TP

151、Gs capital markets team is working with companies to ensure their sustainability and decarbonization-focused equity stories are optimally positioned and communicated to those buyers with the quantified operational and commercial proof points front and centre.As the firm raises its second Rise Climat

152、e fund and its new Transition Infrastructure fund which will take advantage of and add to the same portfolio operations business-building capabilities and more of the initial Rise Climate Fund I companies approach the end of their hold periods,TPG sees these trends continuing to accelerate in the co

153、ming years as the energy transition sector evolves and matures.CASE STUDY 4TPGBridging the Divide:Private Markets and New Drivers of Value Creation16Climate-related opportunities are an important investment theme at EQT,ranging from early-stage ventures to scale-up and large buyouts through its infr

154、astructure and private capital strategies.EQT aims to help strong companies address environmental challenges by growing them,improving their operations and offering relevant solutions through portfolio companies products and services.The firm has validated science-based targets for 44 portfolio comp

155、anies,corresponding to 57%of its invested equity,and its infrastructure business has invested more than 12 billion($13.4 billion)in the energy transition to date,including in the energy and environmental sectors,as well as transport investments with a significant decarbonization angle.Owing to its i

156、ndustrial heritage,since its inception EQT has focused on investing in businesses that it can develop from a commercial and operational perspective.Across its infrastructure and private capital strategies,it has focused on commercial excellence,high-quality procurement,digital transformation,capital

157、 expenditure(capex)efficiency,talent management,cost management and other critical asset management functional disciplines.As part of its objective to future-proof companies and help them achieve overall commercial and operational excellence,operational sustainability has proven to be a successful s

158、trategy.Companies with a strong sustainability value proposition have the potential to attract premium valuations,create fundamentally stronger equity stories and drive more successful exits.Over the past years,EQT has continued to build its sustainability capabilities the firms extensive front-end

159、work in developing sustainability themes and value drivers within its investment segments has allowed it to be on the front foot,identifying potential winners and disruptors within specific industry subsegments.EQT programmatically assesses its portfolio companies to identify,quantify the potential

160、and accelerate the maturity and performance of its sustainable operations,as well as to target growth of sustainable revenue streams throughout its entire portfolio,seeking to ensure a robust future growth trajectory.EQT aims to bring quantified commercial insights and capabilities to management tea

161、ms at the outset of the due diligence process of a potential acquisition.When a company is acquired,EQT works with the management team to develop full potential plans(FPPs),in which it aims to integrate sustainability workstreams and transformational key performance indicators(KPIs)alongside the oth

162、er key commercial or operational value creation opportunities.The firm will evaluate the upside of sustainability to improve the business model and outlook of its portfolio companies.For example,many cases in the infrastructure portfolio see the FPP anchored on a sustainable transformation of the en

163、tire company as a core part of the business model.This frequently means building high-quality capabilities to win tenders or contracts where there is customer willingness to pay for more decarbonized or sustainable products or services.The firm works with the management teams to build world-class sa

164、les,pricing and marketing and bids teams to work alongside technical and procurement teams.The work can also take the form of improving broader GTM efforts,repositioning companies from a brand and communications perspective,running sustainability marketing campaigns to raise greater awareness or ref

165、ining their approach to community and government relations.In other instances,EQTs work will be more specific to one or more products and services within a broader suite of offerings that could be made more sustainable or decarbonized.There are also instances in which a company has a strong sustaina

166、bility or decarbonization programme but needs support to commercialize it with its customers.A great deal of change management is associated with these sustainability transformations and commercial and operational accelerations.That is why EQT brings advisers from its 600+network with relevant indus

167、try backgrounds from C-suite positions onto its companies boards.These advisers understand the most important end markets,given their prior operating experiences,how customers are evolving their purchasing criteria with regard to key sustainability preferences and what it takes to implement the init

168、iatives necessary to drive that change.Lastly,EQT has been refining its process for preparing companies for exit from a sustainability perspective.It spends more time framing up the sustainability opportunity for each business,including how the new owner can build on the progress made during the com

169、panys next phase of growth.Businesses with further potential in sustainable value creation are better positioned to attract a wider pool of potential buyers.It is this ambition to develop companies and position them to play a meaningful part in the future economy,during and beyond its ownership,that

170、 EQT believes will continue to set it apart.CASE STUDY 5EQTBridging the Divide:Private Markets and New Drivers of Value Creation17Permira has a history of around 40 years of backing secular growth trends.In line with this,the firm has increased its climate investing activities within climate and bui

171、lt a team to invest throughout the climate transition value chain.While the need to deliver global net zero by 2050 goals equates to annual spending of around$3.5 trillion,26 climate transition as an industry is still relatively nascent.As such,climate-focused companies require both capital and valu

172、e creation expertise to aid in accelerating this transition.Much of what companies in this industry need aligns with Permiras reputation for being growth investors at scale.The firms history of making the most of its resources and the expertise of its senior advisers,operating partners and dedicated

173、 value creation team to help its portfolio companies management teams drive growth,positions the firm well to be a partner of choice for many climate transition businesses.As with each investment the firms funds make,a detailed and expansive value creation plan for these businesses would be a key dr

174、iver of growth.For climate more specifically,several important value creation levers can be drawn upon.First,investing in operations to enhance product offerings and drive efficiencies for these climate transition businesses is key.This includes implementing new systems and processes,further technic

175、al enablement and digital transformation,maturing GTM approaches,refining customer segmentation and pricing,marketing effectiveness initiatives and enhancing/growing a companys sales and marketing functions.These measures,deployed in partnership with management teams,are critical foundations for inv

176、estments that Permira seeks to back in the climate sector.Second is to globalize portfolio companies.With a global presence,Permira is a proven partner in helping businesses bring their innovative products and services to more markets worldwide.Many businesses in climate transition industries rely o

177、n global value chains and need to expand internationally.For example,if a company is based in Europe and wants to expand into North America,Permira can make use of its global platform and network to help with go-to-market initiatives,enabling revenue growth in markets where a company might be underp

178、enetrated.Third is a critical focus on access to talent.Some climate transition sub-industries are facing acute talent shortages.Permira can help its portfolio companies access and create incentives for talent in a more strategic way,allowing them to establish themselves as employers of choice.Attra

179、cting and retaining top talent ensures that employees can be part of a company that is contributing meaningfully to the climate transition.These value creation levers,and others,need to be sequenced and considered in the context of the typical private equity investment period.The first year of an in

180、vestment is one of the most important in setting the new trajectory of these businesses.Permira works closely with its management teams pre-investment and in the first few months post-investment to determine what is achievable before putting the value creation plan into action over the long term.As

181、Permira partners with climate transition businesses,the value creation capabilities and resources that the firm can deploy will be crucial for delivering outperformance and ensuring those companies will help accelerate the energy transition in the years ahead.CASE STUDY 6PermiraBridging the Divide:P

182、rivate Markets and New Drivers of Value Creation183Private equity:A detailed study Private equity plays an important role in refashioning and scaling companies to meet the decarbonization and climate change challenge.From the initial stages of an investment,many energy transition GPs align portfolio

183、 companies strategies with commercial sustainability and decarbonization objectives,working with management to identify growth opportunities and develop aligned value creation plans.In carve-out transactions or transformative M&A,they can transform under-resourced divisions into decarbonization-firs

184、t companies and scale new energy platforms quickly.They can also use their network of operating partners and senior advisers,including former CEOs and functional experts in areas such as commercial excellence,operations,supply chains,human capital and sales and marketing.27 By aligning business mode

185、ls with climate transition and decarbonization goals,GPs help portfolio companies achieve rapid growth,maximizing returns and accelerating the energy transition.Through dedicated vehicles as well as theme development within flagship funds,they gain an edge compared to peers in sourcing transactions

186、and seizing opportunities that their competitors may miss.Important value creation levers include professionalizing companies for growth through digital transformation,refined customer segmentation and ideal customer profiles,pricing strategies for capturing sustainability premiums and better struct

187、uring sales organizations.28 These measures lay a strong foundation for growth and decarbonization,helping portfolio companies capture more customer share-of-wallet.Additionally,bringing in operating experts also allows for better human capital management at portfolio company level,enabling business

188、es to scale their commercial and support functions with the right talent to drive profitable growth and attract future investment.29 By aligning business models with climate transition and decarbonization goals,GPshelp portfolio companies achieve rapid growth,maximizing returns and accelerating the

189、energytransition.19Bridging the Divide:Private Markets and New Drivers of Value CreationHow Gen Zs and millennials are driving climate action through their career decisionsResearch companies environmental impact/policies before accepting a job from themChange job due to environmental impact concerns

190、Percentage who say they and their colleagues are putting pressure on their employers to take action on climate change54%Gen Zs48%millennials27%20%32%26%25%19%30%23%Gen Zs already do/have doneGen Zs plan to in the futureMillennials already do/have doneMillennials plan to in the futureA well-structure

191、d GTM strategy is essential for success.GPs work closely with companies to ensure they are recognized for meeting and addressing customer pain points.This includes upskilling sales,marketing and customer success teams to better sell their companys sustainability value proposition and make use of dat

192、a for insights that can be put into practice and then inform product roadmaps.These insights can unlock additional operational and supply-chain opportunities and investment,further driving sales of more sustainable offerings.GPs can support with upskilling different business function leads,from sale

193、s and marketing to procurement to engineering and R&D.As Lennehag of UBS points out,“When we and our GP clients evaluate the results of commercial market studies on the buy-side or prepare for the sell-side,we seek to understand the customer personas and groups surveyed are these buying behaviours t

194、hat are likely to shift as new product information comes to fore?How is this likely to affect the sustainability premiums implied?If companies can come to their bankers with the commercial insights,quantified business case and revenue and EBITDA growth plans paired with compelling use of proceeds to

195、 make that connection for buy-side investors to get them excited,they can more credibly earn that sustainability market premium.”30 By tackling the focus on decarbonizing operations and driving environmental and social improvements in the supply chain,while simultaneously refining a companys GTM mot

196、ion,GPs are able to help a portfolio company better communicate the value of its sustainable solutions to current and potential customers and future investors.These efforts are often paired with brand positioning work to highlight each companys sustainability value proposition,increasing customer lo

197、yalty and preference.According to Oracle,“70%of people would be willing to cancel their relationship with a brand that does not take sustainability and social initiatives seriously and 69%would even leave their current company to work for a brand that places a greater focus on these efforts.”31 Alig

198、ning business models and GTM strategies with customers decarbonization needs positions these companies to thrive in a market with growing demand for sustainable solutions.Talent acquisition is also crucial as companies grow.GPs help companies attract top talent by using their senior executive networ

199、ks between industries.A recent Deloitte survey found that,“Two in 10 Gen Zs and millennials have already changed jobs or industries due to environmental concerns,and another 26%of Gen Zs and 23%of millennials plan to in the future And 72%of Gen Zs and 71%of millennials say environmental credentials

200、and policies are important when considering a potential employer.”32 To that end,GP human capital operating partners are increasingly working with company talent teams to harness sustainability stories to boost employee engagement and attract and retain talent.How Gen Zs and millennials career decis

201、ions drive climate actionFIGURE 4Source:Deloitte.(2024).2024 Gen Z and millennial survey.https:/ According to Oracle,“70%of people would be willing to cancel their relationship with a brand that does not take sustainability and social initiatives seriously.”70%Bridging the Divide:Private Markets and

202、 New Drivers of Value Creation20Lastly,exit planning is a priority for GPs,with theses developed early in due diligence.GPs with energy transition funds continually assess and prepare portfolio companies for exit by building strong sustainability equity stories and ensuring market-ready quantificati

203、on of sustainability outcomes.They provide operational proof points to support the product benefits communicated to customers and potential investors.As Meyer of J.P.Morgan notes,“Many GPs are now proactively working with companies 1218 months or more ahead of an exit to develop the commercial,brand

204、 and operational proof points around the sustainability characteristics of their companies to attract impact and energy transition funds and discerning traditional funds targeting these investments.For companies that need to do more robust work around their business model or launch new or more susta

205、inable products and services,this work needs to start even earlier for it to be meaningful and to attract this wider universe of buyers.”33 By positioning companies to appeal to a broad range of buyers,including impact and energy transition-focused GPs,sponsors can maximize interest and attract high

206、er bids.34 Drivers of impact12345678910Source deals through mission-aligned networksUncover opportunities through deep market experienceBuild values alignment with investeesLeverage impact expertise to develop more effective businessesEnhance investee branding and storytellingAttract and retain mana

207、ger and investee talentUnlock public and philanthropic capitalPromote discipline and efficiency in operations through impact accountabilityEstablish credibility with impact-driven stakeholdersOptimize social,environmental and reputational risk management10 drivers of impact alphaACCESSING OPPORTUNIT

208、IESSTRENGTHENING OUTCOMESCREATING VALUEFIGURE 5Source:Harvard Law School Forum on Corporate Governance.(2023,June 20).Alpha in impact:Strengthening outcomes.https:/corpgov.law.harvard.edu/2023/06/20/alpha-in-impact-strengthening-outcomes/Lennehag of UBS also makes the point that“When GP portfolio co

209、mpanies are preparing for an exit,whether in the run-up to an IPO or getting ready for an auction,they should prepare for the next generation of capital that is seeking to invest in more sustainable,circular,energy transition and nature-focused products and services.Companies should look to attract

210、the widest pool of buyers,whether that is private markets impact and energy transition funds,strategics looking to bolster the sustainability profile or public equity investors.”35 Careful exit planning can help maximize returns and demonstrate to future investors how a companys sustainability featu

211、res can drive its next phase ofgrowth.Bridging the Divide:Private Markets and New Drivers of Value Creation21BeyondNetZero(GA BnZ),is General Atlantic(GA)s climate growth equity strategy,which sees it partnering with businesses that are accelerating solutions for the net-zero transition.Launched in

212、2021,GA BnZ targets the funding gap that climate and decarbonization technology start-ups face when scaling up.Venture capital(VC)cannot always take proven technologies to scale,since these often need growth capital to bolster commercialization.This funding gap for companies,from climate technology

213、to infrastructure,means GA BnZ has wide-ranging opportunities to help businesses make progress in the climate transition.With GAs experience in rapidly scaling growth companies for four and a half decades,GA BnZ has the platform,capabilities and resources to enable its portfolio companies to achieve

214、 global scale and,ultimately,realize a global impact.Every company in which the fund invests requires different value creation triggers and engagements for durable growth.GA BnZ companies can access to the full range of value creation resources and tools developed by GAs growth acceleration,capital

215、markets,human capital and sustainability teams,comprising more than 70 dedicated professionals globally.These teams hold more than 1,000 meetings annually to support growth companies as they scale in areas including pricing strategy,GTM,talent acquisition,carbon footprinting and sustainability gover

216、nance.Commercial acceleration capabilities for the portfolio,and how to optimize them,are of particular important for GA and critical to the growth of its energy transition-focused businesses.The company uses its expertise in digital and online marketing to aid in areas such as accessing new custome

217、rs,sales and client success,and providing data-driven insights that help companies to expand their business models.The firm also works with management teams in this context to conduct market studies,analyse the voice of the customer and customer insights,conduct pricing studies,refine personas and i

218、deal customer profiles,and understand how companies can leverage those insights for customer success and to drive marketing strategies.In terms of the energy transition,GA evaluates decarbonization goals,product functionalities and the existing or target customer segments willingness to pay for more

219、 sustainable or decarbonized products and services.Identifying and bringing in the right talent is also critical for a companys efficiencies and scale.As it progresses through rapid growth earlier in its life cycle,an organization can become misaligned.GA supports the build-out of mid-to senior-leve

220、l positions at a company through its human capital capabilities.Drawing on a global talent bank of nearly 10,000 people including a network of successful entrepreneurs,senior leaders,operating partners and board members GA takes a global talent perspective to identify candidates who bring the right

221、expertise to support growth companies.GA also brings systematic M&A capabilities to its portfolio companies.The firms capital markets team is dedicated to exploring how GA BnZ companies can use inorganic growth to scale their business models.GA helps companies consolidate assets in their market and

222、anticipates how business models might evolve.In many cases,this involves horizon scanning to assess nascent technologies that will be essential to the energy transition down the line.This capability is also applied when companies enter new markets and geographies.GAs experience and resources around

223、the world can enable that expansion,bringing more decarbonization solutions to more customers in different regions.GA BnZ partners with its companies to optimize them ahead of an eventual exit.As a growth equity strategy,GABnZs long-term partnership and patient capital model helps companies realize

224、their potential ahead of important liquidityevents.IPOs have historically been an important exit path for GA portfolio companies given their growth orientation,and the firm brings its capital markets experience to build a strong equity story and meet the broader sustainability expectations of public

225、 market investors.GA BnZ also looks to attract the widest pool of sponsors and strategic investors,including impact and energy transition GPs.It has seen that investors can be willing to pay a premium for companies with proven green technologies and profitable business models.One of the main benefit

226、s of tying the sustainability and energy transition features to the companys broader equity story is that it tends to attract investors interested in supporting that story,keeping the company focused on its early goals even when it transitions to a public company.The GA BnZ team sees an unprecedente

227、d market opportunity in the global energy transition.Market studies have shown that 80%of the technologies the world needs to reach net zero by 2050 already exist,but only around 10%are currently commercially available.36 If private markets investors such as GA BnZ can successfully and rapidly scale

228、 businesses in their portfolios,they will have an outsized impact on driving emissions reductions.CASE STUDY 7General Atlantic/BeyondNetZeroBridging the Divide:Private Markets and New Drivers of Value Creation22Tikehau Capital launched its first private equity decarbonization strategy in 2018.Since

229、then,it has developed a deep understanding of the field through in-depth market analysis and theme development work with decarbonization industry subsegments.In that time,the attractiveness of many of the investment themes the firm began considering in 2018 has grown substantially.Because the firm t

230、ook a longer-term view,it was an earlier mover than others investing in decarbonization inprivatemarkets.In areas such as electric mobility,building materials or energy efficiency-focused companies,Tikehau was able to reshape business models and use its GTM capabilities.The firm provides market insi

231、ghts and business cases to management teams to launch or reposition products and services,allowing these companies to capture new revenue streams and position themselves to take advantage of the substantial tailwinds associated with the energy transition.In the first vintage of its decarbonization s

232、trategy,the firm has partnered with company senior leadership teams to bring new product offerings,such as electric engines or more energy-efficient doors and windows,into new customer segments and geographies on which those companies had not previously been focused.The work has involved introducing

233、 subscription-based revenue models that allow for greater scale and decarbonization potential;branding and rebranding work to ensure customers and future buyers understand the decarbonization value proposition of each company;and marketing and salesforce effectiveness work to support companies in pu

234、rsuing more attractive and profitable customer segments with sustainability tailwinds.International expansion is often a core part of the growth plans for these businesses,and Tikehau has used its decades of work in internationalizing many of its companies into markets where they have not traditiona

235、lly had the confidence to operate to allow these companies to grow their business as well as their decarbonization impact.This kind of decarbonization-first commercial work often requires significant mindset shifts and realignment of the entire portfolio company commercial organization to generate t

236、hese outcomes.The firm also works closely with management teams to continually assess the optimal exit paths for each company.As early as possible,it outlines the actions companies need to take if they are to attract the broadest pool of potential buyers,including accessing other impact and decarbon

237、ization vehicles and focusing on going public via an IPO with a strong sustainability story that is inextricably linked to each companys broader equity story.In most cases,in the investments that the firms private equity decarbonization strategy has made to date,Tikehau Capital has proactively broug

238、ht commercial decarbonization insights to the portfolio companies as a core part of the investment case.This is done at the earliest stages of their due diligence process and as part of the conversations with management teams about how the business can grow in the next three to five years.Tikehau Ca

239、pital then drives that alignment with management teams with quantified insights to support the development of the value creation plan for the business.In investments involving carve-outs or transformative M&A,Tikehau has identified the potential to accelerate the growth of under-resourced and non-co

240、re divisions of larger companies.These divisions could be carved out or divested by prior buyers and,with Tikehaus support,transformed into standalone decarbonization-first companies.Tikehaus involvement and execution of these transactions have made these opportunities possible and realized the asso

241、ciateddecarbonization.Over the past six years,Tikehau has developed and refined this approach and continues to deploy it as it raises and invests from the second vintage of its private equity decarbonization strategy.In the firms view,the opportunity set presented by decarbonization is enormous,and

242、the need for capital-aligned governance and commercial and operational excellence to drive the transition at the speed and scale required will continue to grow.CASE STUDY 8Tikehau CapitalBridging the Divide:Private Markets and New Drivers of Value Creation23Paine Schwartz Partners(PSP)s 20-plus-year

243、 track record in the food and agriculture sector demonstrates its ability to identify historically underinvested areas throughout the food supply chain.Through its investment activities,the firm seeks to feed better food to a growing population with more efficient use of resources.During its due dil

244、igence,PSP ensures that the business models of potential targets are aligned with its two core themes:productivity and sustainability;and health and wellness.Beginning in earnest after companies enter the portfolio,the firm brings its in-house expertise and large group of seasoned operating director

245、s and senior advisers to drive value and sustainability.PSP focuses on commercial excellence,R&D,human capital and operating effectiveness to drive revenues and improve margins at its portfolio companies.The repeatable processes and programmes designed by the firm were created to ensure that these c

246、ritical value creation efforts can happen systematically throughout the portfolio at scale.To build accountability,PSP partners closely with CEOs and board chairs of its majority-owned portfolio companies to develop annual financial,strategic and sustainability goals linked to CEO compensation.These

247、 goals help PSP portfolio companies rapidly scale,create efficiencies and develop more sustainable products and services,with the goal of driving commercial success and more profitable impact.PSP believes that starting the sustainability-focused value creation planning and positioning process early

248、during its ownership gives its portfolio companies more time to develop their commercial and operational initiatives.The firm has exited investments to impact funds in the past and,given the acceleration of capital available from impact funds and strategic buyers looking to scale their sustainable o

249、fferings,PSP expects to do so with more regularity in the future.Partners Group is an active investor in both infrastructure and impact investing through its PG LIFE platform.Over the years,the firm has observed a transition in impact investing from smaller,niche funds to mainstream funds for a broa

250、d range of investors,including institutional investors,private wealth clients and sovereign wealth funds.This evolution is based on a desire to invest at scale through larger ticket sizes and a broader geographical scope,encompassing both developed and developing markets.A focus area for investors i

251、s to ensure there is no trade-off between impact and financialreturns.Partners Group approaches its thematic investment sourcing through several criteria and parameters.Its three overarching themes are decarbonization,digitalization and new living(changing consumption patterns),and the firm focuses

252、on market segments with double-digit growth in the next decades.Within infrastructure,the firm identifies significant capital needs in these sectors,recognizing that,for example,investments in carbon management(e.g.carbon capture,utilization and storage),clean power,low-carbon fuels and the circular

253、 economy can yield substantial environmental benefits while addressing multitrillion-dollar market demands.In PG LIFE specifically,Partners Group goes one step further by assessing and identifying companies and infrastructure assets where there is a direct link between the commercial operations of t

254、he business,such as its product or service,and the United Nations Sustainable Development Goals(SDGs).The firms value creation includes platform-building(e.g.accretive add-on acquisitions and success-based capex),operational improvements(top-line growth,profitability and efficiency increases)and sus

255、tainability initiatives.Prior to investment,investment teams focus on ensuring that the management team and assets can drive the performance the firm expects in both financial and sustainability aspects.All investments at Partners Group are assessed through its global investment committee;for invest

256、ments that are part of PG LIFE,the Partners Groups LIFE committee,which is a dedicated forum focusing purely on the impact side,reviews the opportunity,focusing only on the impact aspects,including KPIs to track progress and contributions to the SDGs.Financial performance and impact are additive.Pos

257、t-acquisition,PG LIFE is integrated into the overall investment life cycle with,for example,dedicated onboarding sessions and impact monitoring processes.During ownership,impact and sustainability criteria are owned by a designated investment team member,board member and C-suite member at each portf

258、olio company.By establishing clear governance structures,often including a sustainability committee that oversees initiatives and sets KPIs for impact measurement,Partners Group ensures that the investment will not only meet the financial objectives but also contribute positively to the environmenta

259、l and socialoutcomes.CASE STUDY 9Paine Schwartz PartnersCASE STUDY 10Partners GroupBridging the Divide:Private Markets and New Drivers of Value Creation24GIC began investing in climate solutions after several years work on market analysis,theme development,market sizing and industry segmentation.Ove

260、r the years,the fund has increased efforts to capture sustainability-related investment opportunities throughout the portfolio,from infrastructure investments to stimulate the energy transition to cross-asset initiatives such as the Sustainable Investment Fund(SIF),launched in 2020.GIC has since evo

261、lved these efforts into bigger portfolios in public and private markets,with dedicated teams and capital to deploy.In private equity,after investing in early-stage energy transition opportunities through its Electron Innoport portfolio,the fund decided to form a dedicated private equity investment t

262、eam to increase GICs engagement with decarbonization opportunities.The Sustainability Solutions Group(SSG)has initially focused on minority growth and late-stage venture deals in climate solutions such as renewables,batteries,electric vehicle(EV)charging,e-mobility,the circular economy,carbon captur

263、e and alternative fuels such as greenhydrogen.The team has since expanded its strategy with a new investment programme for green assets,which offers scale-up capital for nascent or maturing climate solutions,such as green steel or long-duration energy storage,that often find themselves caught betwee

264、n traditional buckets of capital.These companies have matured out of venture and growth equity but have not yet scaled and derisked sufficiently to attract lower-cost infrastructure finance.They might have launched their“first-of-a-kind”project and present minimal technology risks but require signif

265、icant capex to scale up.GICs patient,flexible capital could be vital in supporting these firms in their commercialization and scale-up efforts.Overall,GIC seeks attractive entry points and partners with both large sponsors and middle-market funds that need long-term capital partners.The funds invest

266、ment track record in climate contributes to its appeal as a sophisticated partner.GIC focuses on companies with robust energy transition and decarbonization products and services and collaborates closely with partners and management teams,taking a bespoke approach to each investment.Despite a depres

267、sed exit environment in recent years,GIC has the flexibility to hold investments for longer,continuing to add value to investee firms to enhance their attractiveness to future investors.CASE STUDY 11GICBridging the Divide:Private Markets and New Drivers of Value Creation254Infrastructure:A detailed

268、studyInfrastructure investment can promote sustainability and drive the energy transition while delivering commercial success.With extensive experience managing global infrastructure assets,many infrastructure GPs are well positioned to drive growth and create value.This expertise provides reassuran

269、ce to LPs of their ability to meet the rising demand for clean energy and decarbonization solutions.37 The trust these firms have built with offtakers and other counterparties through consistent execution gives them and their operating companies a competitive edge.Their track records enable close co

270、llaboration to meet those high customer standards,reinforcing their reputation as reliable partners for managing large-scale energy transition projects.Many infrastructure GPs have long focused on energy transition in their flagship funds,seeing that companies with strong energy transition value pro

271、positions attract higher valuations,secure stronger market positions,mitigate terminal value risk and achieve more favourable exits.Many firms focus on value creation levers to grow energy transition assets,such as procurement,digital transformation,capital efficiency and talent management.They enha

272、nce performance through commercial excellence,renewal management,lean operations and operational efficiency.Many GPs have strengthened sustainability teams and developed playbooks to improve collaboration and add value through sustainability within those functional areas.GPs also use sustainability

273、to attract customers,optimize pricing and win green tenders,while improving marketing,branding and community relations.Their capital markets expertise helps secure favourable financing,reducing costs and freeing up capital for larger energy transition projects at all stages of development from const

274、ruction finance to grid integration and capital structure optimization once assets become operational.More asset owners are now directly investing in infrastructure and playing an essential role in raising decarbonization ambitions with their GP co-investors.38,39 They help GPs unfamiliar with advan

275、ced practices guide management teams through decarbonization roadmaps and reposition businesses for future growth.Asset owners are drawn to sponsors and deals with strong decarbonization goals and encourage GPs to”go where the emissions are”and undertake brown-to-green transformations in hard-to-aba

276、te sectors.40Many GPs have refined their processes to showcase decarbonization progress and future opportunities,positioning companies to attract a broader range of buyers,including energy transition specialists.41 As Meyer of J.P.Morgan points out,“Those potential buyers are attracted to companies

277、that offer climate solutions or have more sustainable offerings but are very discerning and have high standards for the companies they back.They want to see that the commercial work has been done to identify the customer pain points with regard to sustainability and how the targets offering meets th

278、ose needs,and that there is an aligned brand and GTM capability for that to scale under a new owner.They want to see the customer willingness to pay a premium and that the offering from the company is differentiated.They also want to see that the operational work has been done and there is quantifia

279、ble data to demonstrate that the products and services meet that need.If all of that work is done,it is much easier for companies and their bankers to justify that multiple uplift.”42 This holistic asset management approach combining strategic development with rigorous execution allows firms to scal

280、e energy transition investments faster and at a larger scale regardless of which fund they sit in today.As infrastructure GPs focused on energy transition grow,they see even more opportunities to integrate sustainability expertise,positioning GPs to accelerate climate solution investments on the sca

281、le required for the energy transition.More asset owners are now directly investing in infrastructure and playing an essential role in raising decarbonization ambitions with their GP co-investors.Bridging the Divide:Private Markets and New Drivers of Value Creation26APG takes a proactive approach to

282、working with partners on sustainability and decarbonization as part of its direct investment activities in infrastructure assets.APG engages with co-investors,management teams and operating partners at the outset of deal discussions to increase their ambitions in setting science-based climate target

283、s at an asset level.APGs approach hinges on a robust alignment with its pension fund clients and its capacity to deliver their ambitious long-term sustainability goals.When APGs investment team begins a relationship with an operating partner or works with a co-investor for the first time,they commun

284、icate the high level of ambition with which they approach every deal.When partners do not share such ambition,ongoing and active engagement to drive alignment is crucial.On the other hand,when investing alongside other pension funds and asset owners with elevated sustainability and decarbonization c

285、redentials,they are well aware of the high standards expected for the investment.Usually,co-investors can see how addressing climate change drives value and mitigates physical and transition risks.Through ongoing dialogue and governing body discussions,partners develop and further their understandin

286、g of the relevance of holistically integrating such considerations within all phases of the investment process and the underlying operations.APG always welcomes financial and operating partners that bring deals with fully developed strategies and a robust theory of change.These strategies include se

287、tting clear objectives and maintaining effective measurement and reporting mechanisms to monitor,communicate and,more importantly,continuously improve the investments performance from a sustainability and decarbonizationperspective.Governance is key.A strong strategy is always led by a knowledgeable

288、 team and overseen by a governing body that understands how sustainability drives value via stakeholder engagement,top-line growth and risk management.Infrastructure as an asset class plays a significant role in transitioning towards a low-carbon and more sustainable economy.As such,and as an active

289、 investor in the sector,APG commits to further work and engagement with its financial and operating partners to deliver on its pension fund clients ambitions while generating sustainable and long-term returns.Brookfields long history as an owner-operator of essential infrastructure assets worldwide

290、enables the firm to benefit from deep operational expertise in driving the value and growth of its portfolio companies and assets.One strength of Brookfields asset management and operating capabilities for its renewable power platform,as well as its flagship Global Transition Funds,is the relationsh

291、ips the firm has cultivated with large corporate clients,considered some of the largest buyers of clean power globally.A prominent example is Brookfields partnership with Microsoft to deliver more than 10.5 gigawatts of renewable energy capacity by 2030,one of the largest corporate clean energy agre

292、ements ever.43 This long-standing history of execution provides certainty and confidence to partners,giving Brookfield a competitive advantage as an investor by demonstrating that the firm can work with its own operating companies to meet the exacting standards of large customers through the trust i

293、t has gained.Scale also enables Brookfield to use its capital markets teams to drive even more favourable financing terms that will be accretive to their companies and partners by reducing their cost of capital.This frees up additional capital over time to drive greater decarbonization instead of go

294、ing towards higher interest payments and applies to construction finance,funding interconnection to the grid and optimizing company capital structures once the assets are operating.The firms commercial,operating and capital markets capabilities,when paired with strong management teams and a derisked

295、 asset base with a high-quality pipeline and access to a high-quality supplier base,positions Brookfield to execute optimal exit strategies.It has global relationships with the major buyers and sellers of assets and can ensure that each company is well positioned for the next buyer to continue to sc

296、ale its energy transition platforms aggressively.Brookfield applies a portfolio management approach that positions its companies for growth,and this,alongside its hard work in developing and operating projects,enables Brookfield to scale energy transition investments in a differentiated way.Brookfie

297、lds history of building renewable energy and transition platforms globally is what led it to launch its emerging market-focused Catalytic Transition Fund in partnership with its climate-focused investment vehicle CASE STUDY 12APGCASE STUDY 13BrookfieldBridging the Divide:Private Markets and New Driv

298、ers of Value Creation27CASE STUDY 13 CONTINUEDALTRRA at the 2023 United Nations climate change conference(COP28).That fund,managed by Brookfield,is the next phase of growth for its transition platform.According to the International Energy Agency(IEA),emerging markets comprise an ever-increasing shar

299、e of global emissions and have historically been starved of energy transition capital,receiving only 15%of global energy transition investments.44 Brookfield is focused on“go where the emissions are”and investing in the emerging markets fits its strategy.The firm knew a dedicated vehicle was needed

300、to capitalize on the opportunity and bring the scale that could not exist within a more broadly diversified fund vehicle.Brookfield has had investment and operating teams locally in most of the largest emerging market countries for many years.This long track record of operating effectively in those

301、jurisdictions,coupled with the firms focus on decarbonization and transition planning,access to high-quality equipment,construction and engineering capabilities,global offtaker relationships and M&A execution experience,gave the firm and its partners the conviction and credibility to launch the new

302、fund.As the Catalytic Transition Fund continues to scale alongside the Global Transition Fund,the firm sees no shortage of opportunities in the future.Paired together,the funds represent the largest pool of private capital dedicated to the transition to net zero.The combination of decarbonization an

303、d robust transition planning expertise with commercial excellence and operating capabilities will continue to drive Brookfields energy transition efforts and accelerate investments in decarbonization solutions.AIMCo believes that investing in climate solutions alone is not sufficient to decarbonize

304、the global economy.It is just as important to”go where the emissions are”.Real emissions reductions are achieved when investment decisions help companies reduce their carbon intensity and increase their climate solutions offerings.Traditional energy-intensive assets with credible decarbonization str

305、ategies may be where the biggest emissions reductions can be achieved.Investors should not shy away from these opportunities.AIMCo believes that the industry,particularly asset owners and managers,needs to have a nuanced conversations with regard to this topic in the years ahead.The fund takes a del

306、iberate approach to thinking about the climate transition readiness of its assets.AIMCo developed its own climate taxonomy as a tool to identify areas of risk and opportunity in existing and prospective investments,classifying assets into defined categories of grey,transition or green.AIMCos taxonom

307、y appraises assets in terms of two variables.First,the fund benchmarks the energy intensity of the asset compared to the carbon intensity of its sector.Second,it assesses the maturity of the assets transition plan by evaluating aspects such as its greenhouse gas(GHG)emissions inventory management pl

308、an,target type,level and ambition,and the capex and management team needed to achieve the assets stated climate targets.This framework provides a tangible and achievable basis for conversations between AIMCo and its portfolio companies.AIMCo is now working collaboratively with the management teams o

309、f portfolio companies to create robust emissions inventory management plans and develop transition plans,including an assessment of how ready assets are to achieve their near-or medium-term targets and what capex and management team attention would be needed.With each collaboration,the fund is able

310、to further understand and refine best-in-class practices that can then be used to help other portfolio companies that are earlier in their journey to accelerate progress and value creation.CASE STUDY 14AIMCoBridging the Divide:Private Markets and New Drivers of Value Creation28Ardian Infrastructure

311、has progressed beyond the strong ESG foundation the firm established towards a more holistic and integrated ESG approach linked to portfolio company operational excellence,while deliberately focusing on three key drivers of positive change:strong governance;ESG-linked incentives;and cross-functional

312、 collaboration and knowledge-sharing.Operational expertise is the foundation of Ardians approach to managing its direct infrastructure investment assets,and the team has strengthened this in recent years by hiring candidates with purely industrial backgrounds and by enhancing its internal data scien

313、ce capabilities.The team reinforces this in-house expertise through the support of its extensive operating partner network(more than 30 senior advisers),as well as Ardians internal sustainability team comprising 13 experts(including climate,data management and ESG regulatory specialists),to support

314、its portfolio companies not only as a capital provider but also as a supportive partner able to pull levers to simultaneously drive decarbonization and digitalization while achieving superior financial performance.In embedding ESG into the full investment life cycle and its industrial asset manageme

315、nt approach,Ardians infrastructure team is able to link strategic sustainability objectives and management incentive packages to ESG targets from day one of its investments(100%of CEOs in Ardians European Infrastructure portfolio have at least one ESG KPI linked to their bonus package),and the annua

316、l collection and monitoring of data by Ardian(more than 200 ESG indicators are monitored,using a dedicated data management platform)enables investment teams to make informed and effective decisions and to assess the progress and achievement of the sustainability objectives of their portfolio compani

317、es.Furthermore,with more than 30 operating partners that support the infrastructure team,Ardian takes a hands-on approach to designing sustainability incentive plans with management teams and developing ESG strategy early on to ensure that clear indicators of success can be established.This approach

318、 of using industry expertise and hands-on engagement with management teams has reshaped the way in which Ardian approaches business challenges and collaboration and supports portfolio companies in managing risk,optimizing operations and navigating the complexities of capex planning and growth strate

319、gy execution.A notable example of the value derived from this approach,as well as the teams conviction in backing decarbonization and digitalization,is AirCarbon,a software product developed fully in-house by Ardians data science and IT teams in close collaboration with its airport portfolio compani

320、es.AirCarbon helps airports to accelerate progress in quantifying emissions and identifying tangible reduction levers a clear goal to accelerate the energy transition.Through its direct infrastructure investment activities,Ardian has significant experience of owning and operating European airports,a

321、nd it fully recognizes its duty to help secure the future of aviation while working positively towards the industrys net-zero target by 2050.From idea to inception,AirCarbon has now developed into a fully fledged,usable tool to support airports in measuring and managing their indirect emissions and

322、enabling them to make data-driven decisions to reduce their environmental footprint.The challenge that Ardian Infrastructure and airport operators faced was that high-quality data did not exist for airport Scope 3 emissions.To solve this,the infrastructure team built AirCarbon to capture real operat

323、ional data at a granular level and engaged with the Airport Carbon Accreditation programme(ACA,the only internationally endorsed standard that independently evaluates and recognizes airports efforts to manage and reduce their CO2 emissions)to validate the methodology.Ardian successfully deployed Air

324、Carbon at five airports in Europe,and the tool was used by airports to achieve important sustainability milestones.For example,in 2024 the two airports in Milan,managed by the SEA Group used AirCarbon to renew their ACA 4+certification.Following the successful deployment and enquiries from non-Ardia

325、n-owned airports to access the platform,Ardian recently decided to provide AirCarbon more broadly as an open version.The development of AirCarbon over the past five years has further driven a shift in the way the Ardian infrastructure team works internally.What started as a proof of concept has fund

326、amentally shifted the mindset to problem-solving and driving solutions for operational excellence at portfolio company level.The cross-functional collaboration and communication among data science,information technology(IT)and sustainability teams,as well as the deal teams and portfolio company mana

327、gement teams,drove new ways of working and approaching problem-solving.It validated the sentiment that energy transition and decarbonization throughout the portfolio requires input from the portfolio companies themselves and necessitates partnerships and collaboration to find scalable solutions to p

328、roblems that are faced by more than one entity.As Ardian looks forward,the process of embedding specialists across functions to develop bespoke solutions for portfolio companies will continue to take place.Formal ESG oversight at board level will also continue,while all portfolio companies will incl

329、ude dedicated ESG committees and incentives will still be linked to ESG strategy,and the convergence of data,digital and decarbonization will push the team to explore further how they can bring their expertise to support portfolio companies to continue to move sustainability forward.CASE STUDY 15Ard

330、ianBridging the Divide:Private Markets and New Drivers of Value Creation295Sustainability and commercial excellence transferabilityGPs are supporting companies in their traditional funds to use sustainability for commercial growth.As previously stated in this paper,driving investment and greater com

331、mercial outcomes through sustainability and decarbonization is not limited to energy transition funds.Opportunities also exist within traditional flagship funds.Private equity and infrastructure investors are engaging in this work by systematically analysing revenue streams throughout their wider po

332、rtfolios,tagging those with sustainability characteristics and conducting diagnostics to find ways to accelerate growth via market and customer insights and to dig into the revenue operations supporting current GTM efforts.GPs also collaborate with management teams to develop systematic M&A plans ta

333、rgeting businesses with more sustainable offerings to increase the share of revenue that can be tagged to a given sustainability characteristic.Meyer of J.P.Morgan says,“One thing that our GP clients still find challenging is the relative dearth of investment opportunities for energy transition companies that fit between VC and infrastructure on the size and risk-return spectrum.Many companies are