Pioneering Climate-First Investing with OnePointFive and Sarona
The Challenge: Integrating Climate Assessments into Investment Processes
Sarona Asset Management approached OnePointFive to help solve a common challenge: incorporate TCFD (Task Force on Climate-related Financial Disclosures) principles into investment processes, to be able to provide education and support to its GPs, and foster compliance for climate-related disclosures. This prevalent challenge, frequently arising from the complexity of industry requirements, can be effectively addressed with readily available free tools. OnePointFive entered the collaboration ready to bridge the knowledge gap, leveraging our wealth of experience in the financial sector and with investment funds to align seamlessly with Sarona's unique position and objectives.
OPF's Approach: Tailored Solutions for TCFD Alignment
1. Gap Assessment and Recommendations:
We started by comparing Sarona's current investment strategies and policies with TCFD guidance (links to resources to help enable a robust climate analysis below). This helped us identify important gaps and led to over 33 recommendations to better align with TCFD.
2. Quantitative and Qualitative Climate Risk Assessment:
Our analysis spanned Sarona's portfolio of over 30 funds, focusing on emissions hotspots and evaluating climate risks in key countries like Brazil, India, and Vietnam. Going forward, this assessment will not only guide Sarona's mitigation and resilience planning, but will also enable Sarona to offer guidance and support to GPs for conducting similar assessments.
3. Capacity Building and Upskilling:
We created a climate risk assessment cheat sheet and conducted an educational TCFD webinar for GPs, upskilling key stakeholders to seamlessly integrate climate considerations into their strategies. The cheat sheet contained links to free tools and industry-approved, publicly-available guidance documents, with descriptions on how to use each one.
We designed the educational webinar to not only walk through the outcomes of our project, but also share our expertise on how to build a climate strategy, the latest climate-related standards and frameworks, sustainability reporting best practices via TCFD, understanding and analyzing climate risk, and measuring GHG emissions from Private Equity.
Example slide from educational TCFD webinar
Process to Calculate Scope 3 Financed Emissions (developed by OPF using GHG Accounting and Reporting for Private Equity)
Tools of Trade: Enabling Robust Climate Analysis
Our approach leveraged several tools, including:
Guidance Documents
Climate Risk Analysis Tools
Explore the severity of climate change impacts over time in continents, countries, and provinces at different levels of warming, starting with 1.5°C. Access underlying data for in-depth analysis.
Identify coastal and riverine flood risks, and analyze the costs and benefits of investing in flood protection.
INFORM Climate Change Tool
Navigate through different scenario combinations and points in time. Explore results related to risk analysis, hazard & exposure variables, vulnerability gap, and population. Utilize features like Fact & Figures, Key Changes, Hazard Projections, and Country profiles.
Access information on past, existing, or planned government policies and measures related to reducing greenhouse gas emissions, improving energy efficiency, and supporting clean energy technologies.
Explore a comprehensive overview of different countries' approaches to mitigating climate risks in the financial sector. Check information on regulatory and supervisory measures, climate stress testing activity, net-zero strategies, green bond issuance, and disclosure requirements.
Collaborative Dynamics: A Partnership in Action
Collaborating closely with Sarona's team (including Ralitsa Rizvanolli, Head of Investments, Marie Torres, Director of Impact, and Kristina Kuznetsova, Impact Associate) was instrumental in the project's success. This partnership ensured that our solutions were customized to align with Sarona's unique position and objectives.
Our team's extensive experience in the financial sector and with investment funds made OnePointFive well-suited for this project. Drawing on our past experiences, we were able to comprehend Sarona’s business intricacies and the underlying processes and procedures requiring assessment. Having previously developed educational content around both GHG accounting and TCFD, these became pivotal components for this project. Additionally, recognizing Sarona's distinctive role as a fund-of-funds striving to impact across Environmental, Social, and Governance (E, S, G) domains, we came prepared to provide precise, well-supported recommendations that were understandable and realistic for implementation over the next year.
Client Testimonial: A Partnership That Delivers
Ralitsa Rizvanolli, Sarona's Partner and Head of Investments praised the collaboration, expressing "Working with OnePointFive has been exceptional. Their expertise, professionalism, and collaborative approach set them apart. Sarona is now better equipped to develop its system for climate reporting and disclosures and align with evolving sustainability reporting standards for the private equity industry."
Julia Akker, Associate Director at OnePointFive shared, “I thoroughly enjoyed working with Sarona’s team. Not only were they involved and genuinely interested in understanding each project step and outcome, but the earnest dissemination of our results to their leadership team and GPs reflected a profound dedication to positive impact, aligning closely with my own values.”
Impactful Results: A Glimpse into the Future of Climate-Smart Investing
Our findings unveiled a significant revelation: a substantial portion of Sarona's portfolio's carbon footprint was concentrated in just a few companies, with the logistics sub-sector identified as a major contributor. To dive deeper into these results and learn about our recommendations, head to Sarona’s blog.
Recommendations: Charting the Course Forward
Following our analysis, we advised Sarona to update policies with climate considerations, engage GPs in thorough climate assessments, and set relevant metrics, such as targets for GHG emissions measurement and TCFD adoption rates across their portfolio. These steps ensure Sarona's alignment with TCFD, enhancing its climate resilience and reporting capabilities.
Conclusion: A Step Towards a Climate-Resilient Future
Our collaboration with Sarona highlights the crucial role of proactive climate risk assessment and management in the investment sector. Embracing TCFD guidelines and integrating climate considerations into investment strategies allows firms, including Sarona, not only to comply with emerging regulations but also to lead in responsible, climate-aware investing. Our journey with Sarona signifies just the inception of a broader shift towards sustainability and resilience in the global investment landscape.
To learn more about OPF’s Services and Corporate Sustainability Training capabilities, check out Our Solutions.
