The Sustainable Markets Initiative (SMI) was launched in 2020 at the World Economic Forum Annual Meeting in Davos by His Majesty King Charles III when he was The Prince of Wales.
The SMI is a network of global CEOs across industries working together to build prosperous and sustainable economies that generate long-term value through the balanced integration of natural, social, human, and financial capital. These global CEOs see themselves as a ‘Coalition of the Willing’ helping to lead their industries onto a more ambitious, accelerated, and sustainable trajectory.
The SMI seeks to put Nature, People and Planet at the heart of global value creation. This is evident through its Terra Carta, which serves as the mandate for the SMI and provides a practical roadmap for acceleration towards an ambitious and sustainable future; one that will harness the power of Nature combined with the transformative power, innovation, and resources of the private sector.
The Private Equity Task Force was launched in 2021 and is the first ever CEO-level private equity working group established to discuss ways the industry can effect change. The Task Force leverages expertise within each member firm across three priority areas: climate change, biodiversity and sustainability-related metrics.
This paper includes input from the climate change working group, a subgroup of the SMI’s Private Equity Task Force (PESMIT). Leveraging the 2023 Valuing Carbon in Private Markets publication, the PESMIT Climate Working Group and ERM have developed supplemental practical guidance on valuation of carbon in the context of pre-investment.
The purpose of this follow-on paper therefore is to offer further guidance on how to implement the framework, rather than a prescriptive model. In so doing, we believe that by valuing carbon in the pre-investment process, investors will be better equipped to make investment decisions based on quantifiable metrics. Throughout this document, “carbon” is used as an umbrella term encompassing all greenhouse gases and their carbon emission equivalents.
For more details on the SMI and PESMIT, please visit the website.
