For nearly three decades, EQT has made it their mission to help good companies across the globe develop into great ones. Founded in 1994, the Stockholm-headquartered private equity firm is one of the world’s foremost investment companies with a current portfolio of +200 portfolio companies, +1,800 real estate assets, and EUR 92 billion in assets under management.
In 2014, EQT started their journey to track their greenhouse gas emissions and set out in earnest to compensate for the carbon footprint of their own operations. Since then, the company has worked hard to try to reduce their emissions, while undergoing a growth journey, and compensating for those they cannot avoid. “From the moment we began our climate journey, tracking GHG emissions and offsetting, this was also to set an example to portfolio companies in a credible manner,” explains Julia Wikmark, Head of Corporate Sustainability at EQT.
The primary focus remains on emission reductions. Becoming the first PE firm globally to set Science Based Targets (SBTs) in October 2021 - EQT has accelerated its aim to transition to a lower-carbon business across both the company and portfolio. Until the SBTs are fully achieved however, unavoidable emissions will remain. To compensate for these, the company makes it a point to select meaningful carbon credits that pull from a range of solutions. And for that, they have since 2020 turned to Patch.
The right carbon credit balance
Patch connects companies of all sizes with trusted carbon credits from an expertly vetted, broad scope of projects. Until EQT began working with the climate platform in 2020, they had compensated for their unavoidable emissions through mostly traditional credits, such as reforestation projects and wind farms.
These projects, however, did little to fully reflect the firm’s trailblazing Environmental, Social, and Governance (ESG) ethos and did not adequately differentiate EQT from their peers.
“While we made sure that every carbon credit project we chose was both certified and high in quality,” continues Wikmark, “we wanted to increase our exposure to more forward-thinking, permanent carbon-removal solutions that have more recently come onto the scene.”
Patch helped EQT think creatively about the types of credits to buy—credits in line with the company’s vision and progressive approach. Most recently, in 2021, these included frontier technologies, such as bio-oil and concrete mineralization, which represent the future of carbon removal.
The social cost of carbon
In addition to helping select the right portfolio of projects, Patch worked with EQT to define a meaningful budget. To achieve maximum effect, they agreed that the average credit price per tonne should not only be informed by market prices, but also the social cost of carbon (SCC) in Europe.
The SCC refers to the monetary-value estimate of all economic damage—from changes in agricultural output to declines in human health and labor productivity—that result from emitting one tonne of carbon dioxide into the atmosphere. EQT has intentionally followed the carbon credit price development - meaning its average credit price has increased exponentially since 2015 and has seen a total increase by >10x by 2021
“EQT was focused not only on making sound yet cutting-edge choices when it came to carbon credits, but also on ensuring the money they spent had the fullest impact possible,” says Brennan Spellacy, Co-founder and CEO of Patch.
Leading by example
The resulting model—supplementing operational emission reductions with thoughtful investments into innovative carbon removal and storage technologies—acts as an example from which the diverse companies in EQT’s investment portfolio can take inspiration. In this way, EQT aims to scale its climate action worldwide, for even greater reach and impact.
Wikmark concludes: “We hope our example can guide the companies we invest in towards achieving net-zero emissions themselves in a similarly impactful way. Patch is a great partner with whom to do so.”
