Morgan Stanley Investment Management (MSIM) has launched a growth-oriented private equity platform with a specific carbon removal goal.
- The 1GT platform will invest in companies that will collectively avoid or remove one gigaton of carbon dioxide-equivalent (CO2e) emissions by 2050.
- A portion of the team’s financial incentives will be linked to the achievement of the overall goal.
- Investees will be expected to deliver meaningful financial returns and measurable positive environmental impact across mobility, power, sustainable food and agriculture, and circular economy.
MSIM, part of Wall Street giant Morgan Stanley (NYSE:MS), has launched the 1GT growth-oriented private equity platform with a specific environmental target. It will require investees to collectively avoid or remove one gigaton of CO2e emissions from the date of investment to 2050. This goal will be linked to a portion of the 1GT team’s incentive compensation.
It sits within MSIM’s $200 billion alternative investments business and will target private companies, mostly based in North America and Europe, whose products or services enable meaningful reduction of their respective clients’ carbon footprint.
The investees will be selected based on the potential for a meaningful financial return and measurable positive environmental impact across the mobility, power, sustainable food and agriculture, and circular economy themes. The platform will tap Morgan Stanley’s resources to partner with portfolio companies to help monitor ESG risks, increase climate change mitigation, improve ESG monitoring and reporting, and pursue earnings growth, multiple expansion and enhanced exit potential.
Vikram Raju, MSIM’s head of climate investing and the 1GT Platform, said: “As COP27 concludes, it is clear now more than ever that we need to radically alter the traditional model of private equity impact investing in three ways.”
He added: “First, we need to seek climate goals that are tangible rather than anecdotal and ambitious rather than tangential. Second, we believe that in order to catalyze meaningful progress in climate solutions, a significant portion of financial incentives should be linked to such climate goals. Third, the measurement of those goals should be transparent to limited partners. With our 1GT goal and linked financial incentives for the team, we have endeavored to do just that.”
Morgan Stanley has made a series of sustainability commitments. In 2021 it pledged to mobilise $1 trillion for sustainable solutions that support the UN Sustainable Development Goals by 2030. It also plans to reach net zero financed emissions by 2050, achieving carbon neutrality by 2022 and helping to avoid 50 million tons of plastic waste by 2030.