The Clean Energy Finance Corporation (CEFC) has committed $80 million to a private equity fund that’s targeting ambitious emission reduction targets across mid-market companies.

The mandate with Crescent Capital Partners will help to accelerate decarbonization in the healthcare, industrial, and services sectors.

With a total commitment of $1 billion, Crescent’s seventh fund will set decarbonization pathways for each portfolio company to achieve net zero Scope 1 and 2 emissions within 10 years of acquisition. The targets will aim to exceed the requirements of the Paris Agreement. The strategy will also focus on value chain emissions by mapping out the supply chain of each asset to identify specific activities and initiatives to drive a reduction in Scope 3 emissions.

“Getting to net zero emissions by 2050 requires us to use every lever we can to accelerate decarbonisation. We see the very substantial $42 billion private equity sector as having a key role to play here, in influencing the assets it acquires, the way they are managed and in capturing value at exit. As asset owners, forward-looking investors such as Crescent can make a material change across broad portfolios, setting new standards for abatement at the company level while lifting investor confidence via enhanced transparency and disclosure.” says Rory Lonergan, CEFC Chief Investment Officer.

“By investing in decarbonisation now, we can be confident they will continue to play a significant role in our economy in the future, with sustainability embedded in their operations, delivering lower emissions alongside enduring investor support.”

Crescent Capital Director of ESG Lucy Cooper emphasized the company’s active approach to working with portfolio companies to achieve meaningful change. “We look forward to extending this approach to support our portfolio companies in their decarbonisation journey throughout their investment lifetime within our new fund.”

“If Australia is to successfully shift to a lower carbon economy, now is the time to act. At Crescent we are incorporating emissions reduction activities not just because we believe it is the right thing to do, but also because we believe it will build better and more valuable businesses over the course of our holding period.”

Since inception, the CEFC has committed $240 million to PE investments focussed on the transition to lower emissions, including an $80 million investment in the Adamantem Capital Fund II and an $80 million investment in the IFM Investors Private Equity Growth Partners Fund.

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