private assets

Private credit as a catalyst for net-zero

Private credit as a catalyst for net-zero
Peter Pulkkinen - Portfolio Manager

Peter Pulkkinen

Portfolio Manager
Rhys Marsh - Portfolio Manager

Rhys Marsh

Portfolio Manager
Adriana Becerra Cid - Sustainability Manager

Adriana Becerra Cid

Sustainability Manager

As the world faces the urgent challenge of climate change, there is a pressing need for innovative solutions to reduce carbon emissions and transition to a sustainable future. Versatile private credit is well positioned to play a key and differentiated role in accelerating the transition. 

 

Need to know:

  • The strategy supported the generation or enablement of 14,765 MWh of renewable energy in 2022
  • 6,388 tCO2e in greenhouse gas GHG emissions were avoided over the course of the year as a direct result of the workings of the portfolio holdings
  • As of 2022, we have invested in three climate solution providers supporting sustainable activities in 44 US states

 

A CLIC® economy

Our Sustainable Private Credit strategy is dedicated to investing in climate solution providers that are at the forefront of this economic transition and contribute to a broader societal shift to an economy that is Circular, Lean, Inclusive, and Clean (CLIC®).

In the strategy’s inaugural sustainability report, we will provide an overview of our investment strategy and sustainability approach and highlight the achievements of the strategy’s portfolio companies during the year 2022. 
 

The role of private credit

As a forward-looking investor, our goal is to identify businesses that are mitigating climate risks and acting on the opportunities generated by the transition. We believe that there are significant opportunities available to advance the net-zero transition, and these opportunities will require more innovative and flexible solutions than commonly offered through traditional capital markets. We additionally believe that an aligned approach to private credit offers strong opportunities to provide additionality via stewardship and engagement, and to mobilise catalytic capital.

The broader consensus move to net-zero creates investment opportunities in select sectors targeted as priorities by large asset owners and corporations. While many large companies are creating meaningful in-house contributions to the climate transition, some of the most impactful solutions are coming from entrepreneurs within fragmented, under-financed markets working directly with corporate partners. Such corporate consumers of sustainable goods and services often find it more accretive to purchase and scale an externally sourced product or service than to allocate such development to balance sheet.
 

Focus sectors

The strategy seeks to support a climate transition and tackle the net-zero opportunity by financing both disruptive and experienced climate solution providers, primarily ones which operate in the industries depicted in figure 1.

Climate solution providers are companies that offer or enable a solution contributing to decreasing greenhouse gas emissions along with increasing climate resiliency and adaptation through the delivery of sustainable goods, services, or assets.
 

Figure 1: Portfolio distribution in focus sectors

SPC - distributed renewables.svg
Distributed
 renewables
33.4%
Small-scale power 
resources including 
solar, often operating 
at the grid-edge




 

 

SPC - resource efficiency.svg
Resource
efficiency
0%
Products/ services
that allow for more
efficient use of
resources, such as
energy efficiency and
smart city
technologies

 

 

SPC - storage and microgrids.svg
Storage & 
microgrids
33.3%
Related to Distributed 
Renewables but with 
more focus on
resilience and ability
to operate power 
systems
independently

 

 

SPC - energy transition.svg
Energy transition
0%
Products/services 
reducing carbon
emission from
established industries, including 
low-carbon transportation

 

 

SPC - waste to value.svg
Waste to value
0%
Used of waste for the 
creation of renewable 
chemicals, fuels, and 
agricultural products




 

 

SPC - digitalisation.svg
33.3%
Digitalisation and other enabling activity
Providers and enablers of climate infrastructure
particularly supporting the electrification of the economy and the 
deployment of mobile low-carbon infrastructure solutions such as 5G technology

 

Case studies1
 

 

 

Our fiduciary duty

As an asset and wealth manager, we believe it is our fiduciary duty as stewards to understand and avoid risks while helping our clients capture the opportunities associated with the transition to a CLIC® economy. Our Sustainable Private Credit strategy uses a robust, proprietary, and science-based approach that we believe enhances our ability to calibrate risk and return as the transition unfolds. We also use our influence to engage with investees, seeking to strengthen business models, enhance environmental and social additionality, and catalyse follow-on investments.

For a copy of the full 2022 Annual Sustainability Report, please contact your investor relations representative or the Sustainable Private Credit Team's Business Manager at gene.getman@lombardodier.com
 

sources.

1 Important information on case studies
The case studies provided in this document are for illustrative purposes only and do not purport to be recommendation of an investment in, or a comprehensive statement of all of the factors or considerations which may be relevant to an investment in, the referenced securities. The case studies have been selected to illustrate the investment process undertaken by the Manager in respect of a certain type of investment, but may not be representative of the Fund's past or future portfolio of investments as a whole and it should be understood that the case studies of themselves will not be sufficient to give a clear and balanced view of the investment process undertaken by the Manager or of the composition of the investment portfolio of the Fund now or in the future.

 

important information.

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