Earth Day Message from the CEO
In honor of Earth Day, I would like to update you on EQT’s commitment to tackling climate change. In March, I participated in a forum with a group of global business leaders, discussing how we can best address the issues surrounding climate change. With every conversation, one prevailing theme was evident to everyone: the need for urgent environmental action is increasing by the hour, and we all have our part to play.
The most recent International Panel on Climate Change (IPCC) report has made painfully clear the level of action necessary to begin to change that incoming tide that is climate change, with the report stating that limiting global warming to 1.5°C requires us to reach peak greenhouse gas (GHG) emissions by 2025 at the latest. Failure to do so will lead to severe human exposure to extreme weather events, acute food and water insecurity, mass mortalities of natural habitats and biodiversity loss.
The private capital industry is uniquely positioned, due to its governance model and the capital at disposal, to address some of the challenges we are facing today and to help build a better future. At EQT, this is at the heart of our approach as we focus on having a positive impact through our active ownership model. This approach enables our team to invest behind thematic mega-trends, future-proof companies and accelerate the sustainable transformation that is required across all industries and sectors.
The private capital industry also has a critical role in increasing capital flows to businesses providing innovative solutions to environmental challenges. Society needs to contribute approximately USD 90 trillion of investments in the coming 15 years (IPCC) to close the net zero funding gap.
On our side, EQT has invested more than EUR10bn over the last 12 months in climate and environmentally-oriented companies. Our recent investments in firms like Covanta, Cypress Creek Renewables, Oterra, Instavolt and Vinted, among many others, have created industry leaders in e.g. waste management, renewable energy supply and circularity. This is a good starting point, but there is a journey that every firm must participate in if we are to limit the effects of climate change.
We have recently committed all our portfolio companies to achieving net zero by 2040, ten years faster than required by climate science. This ambition covers Scope 1-3 GHG emissions for both EQT AB and our investments, and aims to follow the required 45 percent reduction in GHG emissions by 2030. Already more than 40 of EQT’s portfolio companies have started their explicit journeys towards net zero. To successfully achieve this, we are collaborating with leading institutions – including the Science Based Targets initiative (SBTi) and our peers – on defining net zero standards for financial institutions, drawing on the expertise of leading third-party specialists.
To ensure we hold ourselves accountable, we have undertaken measures to tie environmental performance to financial incentives through EQT AB’s EUR 2 billion of sustainability-linked bond issuances, and intend to further drive behavioral change through sustainability-linked mechanisms and personnel bonuses. Whilst decarbonisation needs to be the first priority, we are also proponents of carbon removal investments to support critical carbon capture & storage innovation. EQT AB’s 2021 GHG footprint was balanced with best-in-class carbon removal and storage projects, priced at >EUR100 per metric tonne of CO2.
Looking ahead, it is clear that environmental inaction is likely to drive severe social and economic instability on a global scale. We need to act now - together with customers, peers, suppliers, shareholders and regulators. We need to continue to transform the way we do business, support climate innovation and accelerate our partnerships in a joint and collaborative effort. We believe that investing in a positive future will also secure the best financial returns for our clients.
Through EQT’s active ownership model and our strong sense of community, I am confident we can help solve some of society's most pressing problems.
Christian Sinding
CEO, EQT