Morgan Stanley Investment Management (MSIM) launched a growth-oriented private equity strategy to invest USD1bn in companies that will remove 1bn tons of carbon dioxide from the atmosphere by 2050 or prevent that amount from entering the atmosphere, as reported by Reuters on November 21. The new strategy, named 1GT, will invest in private companies in North America and Europe to help them reduce carbon emissions and to develop new low-carbon technologies. Morgan Stanley aims to achieve both financial returns and positive environmental impact through investments, which will focus on mobility, power, sustainable food and agriculture sectors, and circular economy. Moreover, the financial firm intends to link some of its 1GT investment team’s financial incentives to the emissions performance of underlying investments, to ensure material progress in climate solutions. 

The USD1bn private equity is a complement to the USD600m of capital that MSIM has injected into companies seeking to mitigate climate change since 2015. The new strategy looks to tap Morgan Stanley’s sizeable resources and collaborate with portfolio enterprises to help monitor environmental, social, and governance (ESG) risks, increase climate change mitigation, and improve ESG reporting. In September 2020, Morgan Stanley committed to reaching net-zero financed emissions by 2050. By 2030, the firm aims to reduce its financed emissions in the energy sector by 29%, the auto manufacturing industry by 35%, and the power sector by 58%.

Sources:

https://www.reuters.com/business/cop/morgan-stanley-im-launches-1-bln-climate-focused-private-equity-strategy-2022-11-21/

https://www.morganstanley.com/press-releases/1gt-growth-oriented-private-equity-platform

https://www.upstreamonline.com/finance/morgan-stanley-sets-2030-financed-emissions-reduction-targets/2-1-1093317