Building on the work of Initiative Climat International (iCI) and its net-zero framework for private equity, AXA Climate and France Invest’s Climate Working Group set out a practical roadmap to turn portfolio decarbonisation into a core driver of value creation for private equity and private markets. With more than half of European LPs now committed to net-zero, asset managers can no longer treat climate as a “nice-to-have”: they must build robust decarbonisation strategies that both reduce emissions and secure long-term performance.
Turning Decarbonisation into a Business Opportunity
The white paper’s first message is clear: decarbonisation in private markets is a business opportunity, not just a compliance burden. Asset managers are encouraged to structure strategies that simultaneously:
Finance “grey” companies on credible transition pathways; and dund low-carbon “solutions” that avoid emissions at scale. This dual approach positions portfolio decarbonisation as a lever for growth, innovation and competitiveness.
7 Success Factors for Decarbonisation in Private Markets
To operationalise decarbonisation across portfolios, the paper identifies seven key success factors:
1/ See decarbonisation as a business opportunity by linking climate performance to revenue growth, cost savings, access to capital and exit value.
2/ Align interests on decarbonisation by integrating climate objectives into governance, investment memos, management incentives and board agendas, with clear roadmaps and external reviews.
3/ Become a competent sparring partner for portfolio companies by resourcing ESG and climate teams properly, leveraging specialised tools and partners, and building peer-to-peer learning networks focused on decarbonisation.
4/ Adopt radical transparency on decarbonisation approaches and challenges with LPs, co-investors, lenders and public stakeholders, despite fragmented standards and data gaps.
5/ Embed a long-term decarbonisation lens into investment decisions, accepting that low-carbon transitions unfold over several holding cycles and shape tomorrow’s winners.
6/ Be lucid about decarbonisation costs—from CAPEX to decarbonise operations to OPEX for measurement and reporting—and mobilise blended financing (transition funds, sustainability-linked loans, public subsidies, value-chain financing).
7/ Test internal carbon pricing now to anticipate transition risk, guide covenants and steer decarbonisation plans at portfolio and asset level.
Managing the Costs and Financing the Decarbonisation Journey
The report underlines that decarbonisation has a cost, but that unmanaged climate risk and delayed transition are even more expensive. Asset managers are encouraged to: quantify the CAPEX and OPEX linked to decarbonisation plans; use internal carbon pricing and scenario analysis to stress-test business models; activate innovative financing mechanisms to support portfolio companies on their decarbonisation journey.
This makes decarbonisation a structured, financed transformation rather than an unfunded mandate.
Decarbonisation as an Engine of Long-Term Value
In a context where “ESG” as a label is being challenged, the paper concludes that decarbonisation emerges as a tangible lever of resilience and competitiveness. For asset managers who act with ambition and clarity, portfolio decarbonisation is not only a climate imperative: it is a powerful engine of long-term value creation for investors, companies and society.
