How PE can plan for climate risk with confidence

In this episode, our speakers share why PE is in a unique position to lead our transition to a low-carbon, circular economy.

Related topics Private equity

As private equity (PE) firms focus on ESG, they must also pivot to a long-term, forward-thinking mindset.

For an industry accustomed to using historical data to project the next four to five years, this is no simple task; however, it is an existential one. Climate change will mean our world looks very different in a decade regardless of the action we take (or don’t take), and PE firms are uniquely equipped to lead this mission, should they choose to accept it.

ESG topics have both financial and commercial relevance, and PE must define and track KPIs that are specific to each portfolio company. It is no longer optional to engage in the ESG conversation, as a lack of awareness is an inherent business risk.

Two overarching climate scenarios are possible, both of which require comprehensive adaptation and imagination:

  • A warming scenario in which rising temperatures impact access to raw materials, stoke political stability and disrupt value chains
  • A transition scenario characterized by increasing regulation, bans and changes in technology and consumer preferences

Six ways PE firms can shift their mindset to increase their climate competence and confidence:

  1. Champion a long-term, forward-looking perspective
  2. Cross-pollinate climate data across workstreams
  3. Incorporate climate scenarios as core data points
  4. Engage diverse perspectives
  5. Embrace complexity and curiosity
  6. Verify competence on climate and environmental risks in investment teams

For your convenience, full text transcript of this podcast is also available. Read the transcript.

Presenters

Hanne Thornam
EY Norway Head of Climate Change and Sustainability Services
Winna Brown
EY Americas ESG Private Equity Leader; Partner, Private Equity Client Service, Ernst & Young LLP

Podcast

Episode 36

Duration 19m 29s

In this series

series overview
(Event List - Manual)

How PE can plan for climate risk with confidence

In this episode, our speakers share why PE is in a unique position to lead our transition to a low-carbon, circular economy.
Podcast

Episode 36

Duration
19m 29s

Presenters

Hanne Thornam

EY Norway Head of Climate Change and Sustainability Services

Winna Brown

EY Americas ESG Private Equity Leader; Partner, Private Equity Client Service, Ernst & Young LLP

Which three geopolitical risks PE investors should watch

In this episode, our speakers discuss how geopolitical risk derived from the Covid-19 pandemic, the tech sector and climate change impacts PE.
Podcast

Episode 35

Duration
19m 47s

Presenters

Famke Krumbmüller

EY EMEIA Leader, Geostrategic Business Group

Winna Brown

EY Americas ESG Private Equity Leader; Partner, Private Equity Client Service, Ernst & Young LLP

Why PE can thrive in Southeast Asia

In this episode, our speakers explore why Southeast Asia is a vibrant region for PE investors who adeptly navigate local dynamics.
Podcast

Episode 34

Duration
24m 14s

Presenters

Luke Pais

EY APAC Private Equity Leader

Winna Brown

EY Americas ESG Private Equity Leader; Partner, Private Equity Client Service, Ernst & Young LLP

How cybersecurity creates value in PE

In this episode, our speakers explore how PE can manage cybersecurity risk and why it should be viewed as a value creation lever rather than a cost.
Podcast

Episode 33

Duration
30m 14s

Presenters

Paul Harragan

EY-Parthenon Associate Partner, Strategy & Transactions, Ernst & Young LLP

PE Pulse: Five takeaways from 2Q 2021

In this episode, Pete Witte, EY Global Private Equity Lead Analyst, explores the key themes and market dynamics from 2Q 2021 that are top of mind for PE investors.
Podcast

Episode 32

Duration
10m 00s

Presenters

Which six consumer categories PE should watch

In this episode, our speakers explore the consumer product categories, behaviors and trends investors should keep an eye on.
Podcast

Episode 31

Duration
27m 00s

Presenters

Winna Brown

EY Americas ESG Private Equity Leader; Partner, Private Equity Client Service, Ernst & Young LLP