Using the SDG Impact Standards as a starting point, Fullerton Fund Management (Fullerton) and the United Nations Development Programme (UNDP) have joined forces to create a sustainability management framework that will steer private equity climate investment practices in Asia.

In order to help private equity firms achieve their net zero targets more quickly, the framework provides a path for implementing those practices.

The environmental and commercial rationale for climate initiatives in Asia is appealing, with the potential revenues for green enterprises in Asia expected to exceed $4trn by 2030.

Governments have issued notable agreements to decarbonise their economies, and approximately $53.5trn in investments are necessary between 2020 and 2060 to reach the initial net-zero targets.

Additionally, the country has tremendous investment opportunities ahead, and private equity, alongside governmental spending, can help bridge the finance gap.

With regard to the environment and sustainability, private equity investors are in an ideal spot to influence portfolio companies further.

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Corporate disclosures are still insufficient in the region, especially in emerging Asia, and disclosure standards are inconsistent.

This presents complications for climate investors who want to evaluate the material ecological concerns and their implications for their investment decisions.

The sustainability management framework advises venture capitalists on how to incorporate sustainability factors and the Sustainable Development Goals (SDGs) into their strategy, management, transparency, and governance procedures in order to meet their decarbonisation targets.

Moreover, the framework enables climate investors to perform a critical review of the numerous alternative investment practices and select the unique collection of activities which effectively matches with their investment mandates and stakeholders’ needs.

Huck Khim Tan, deputy chief investment officer and head of alternatives at Fullerton Fund Management stated: “With the launch of this Sustainability Management Framework with support from the UNDP, we are committed to integrating sustainability considerations in our private equity climate investments. More importantly, we hope to share this framework and insights from real-world case studies with our peers, to enable them to evaluate the relevant sustainability aspects required to optimise decarbonisation in the region.”

“The private sector has a significant role to play in accelerating Asia’s decarbonisation, including in collaboration with and alongside efforts from actors in the public and multilateral domains. Recognising this, we are delighted to collaborate with Fullerton Fund Management to develop this Sustainability Management Framework, leveraging the UNDP’s SDG Impact Standards for private equity funds. This framework is useful for climate investors who are looking to align their internal practices and decision-making to achieve their decarbonisation goals,” added Haoliang Xu, UN under-secretary general and associate administrator of the United Nations Development Programme.