Fullerton Fund Management (Fullerton) has joined forces with the United Nations Development Programme (UNDP) to craft a Sustainability Management Framework aimed at steering private equity climate investments across Asia. Leveraging UNDP's SDG Impact Standards as its cornerstone, the framework serves as a guiding tool for private equity firms, offering a structured pathway towards achieving their net zero objectives.
In Asia, the rationale for climate investments, both environmentally and commercially, stands strong, with the projected market for green enterprises anticipated to exceed US$4 trillion by 2030. Governments have demonstrated robust pledges to transition their economies towards decarbonization, with an estimated investment of approximately $53.5 trillion between 2020 and 2060 needed to fulfill existing net-zero commitments. This underscores significant forthcoming investment prospects, where private equity, in tandem with public expenditure, holds the potential to fill crucial funding disparities.
Private equity investors are well-positioned to exert greater influence on portfolio companies over climate and sustainability issues. However, disclosure standards in the region are uneven and corporate disclosures remain lacking, particularly in emerging Asia. This poses challenges for climate investors who are looking to assess the material environmental issues and their implications for their investments.
The Sustainability Management Framework provides private equity investors with direction on incorporating sustainability factors and Sustainable Development Goals (SDGs) into their strategy, management, transparency, and governance protocols to advance their decarbonization objectives. This framework empowers climate investors to meticulously assess diverse investment practices and select the tailored set that most aptly aligns with their investment mandates and stakeholder expectations.
"As an investor of private capital in Asia, we recognize that sustainability issues have considerable implications for a company's investment value, particularly for private equity, which has a long investment horizon. 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 optimize decarbonization in the region", said Huck Khim Tan, Deputy Chief Investment Officer and Head of Alternatives at Fullerton Fund Management.
"The private sector has a significant role to play in accelerating Asia's decarbonization, including in collaboration with and alongside efforts from actors in the public and multilateral domains. Recognizing 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 decarbonization goals", said Haoliang Xu, UN Under-Secretary-General and Associate Administrator of the United Nations Development Programme.