The Asset Management team at Zürcher Kantonalbank is creating a private equity investment opportunity in CO2e-reducing solutions
Media release from 19 April 2022
- The Asset Management team at Zürcher Kantonalbank is planning to launch a sustainable private equity fund which invests in companies around the world that contribute towards the decarbonisation of the economy.
- It also intends to set up an investment group specifically for pension funds that can invest in the new private equity fund.
- The fund, which is domiciled in Switzerland, has a target volume of CHF 250 million, and provides qualified investors with diversified and cost-optimised access to private equity investments.
- Zürcher Kantonalbank itself will invest up to CHF 30 million in the fund.
- The focus of the investment is on providers of greenhouse gas-reducing technologies, products and services in the areas of renewable energies, mobility, as well as energy and resource efficiency.
The Asset Management team at Zürcher Kantonalbank is planning to launch a private equity fund and an investment group to go with it. The investment group is open exclusively to pension funds. The new investment product for qualified investors aims to achieve an attractive financial return by investing in companies that act as the driving force behind the decarbonisation of the economy with their products and services. This transformation, and as a result compliance with the 2015 Paris Climate Agreement, can only be achieved by using CO2e-reducing technologies and services (CO2e or CO2 equivalent is a unit of measurement used to standardise the impact on the climate of different greenhouse gases such as carbon dioxide, nitrous oxide or methane).
The market is enormous. The Zürcher Kantonalbank private equity team estimates that investments of USD 2,500 billion worldwide are required every year to meet the climate targets. This corresponds to around 2% to 4% of global gross domestic product. As part of the Asset Management team, a team of ten private equity and sustainability specialists are continuously analysing the market for CO2e-reducing alternatives to established products and services. They are focusing on the following three topics, among others:
Energy
- Renewables (solar, wind, hydro), excluding infrastructure
- Distribution and storage of energy (networks, batteries)
- Energy efficiency (low CO2e building, smart cities)
Mobility
- Environmentally-friendly mobility (public transport & logistics, private transport)
- Alternative fuels and materials (synthetic fuels, hydrogen, lightweight materials)
Resource efficiency
- Low-CO2e industry (supply chain optimisation, carbon capture and storage)
- Circular economy (waste management, recycling, sustainable packaging)
- Food production (plant-based products, vertical farming, optimisation of production)
- Land management (precise fertilisation, intelligent sensors)
For the purposes of diversification, the private equity fund considers companies from a range of sectors and regions. In doing so, the fund invests in promising companies following an in-depth selection process – both directly and indirectly via third-party funds.
However, innovations by companies alone are unlikely to be enough to decarbonise the global economy in the necessary timeframe. Countries and organisations also need to adjust their frameworks and incentives to make the consumption of fossil fuels less attractive. “As venture capital, state control and more sustainable consumption gain in momentum, with this new offering we are generating interesting return opportunities for qualified investors,” says Andreas Nicoli, Head of Private Equity.
With the new private equity fund, Zürcher Kantonalbank is strengthening its position as a pioneer for sustainable investing in Switzerland. Today, the Asset Management team manages all active fund compartments of traditional asset classes in a sustainable manner. Around CHF 109 billion is currently under management in the “Responsible” and “Sustainable” product lines. “The new fund fills a gap in our existing sustainable product range. With our corporate policy, we are committed to developing products and services that accompany our clients on the path towards a more sustainable future,” explains Romina Schwarz, Public Service Mandate Manager at Zürcher Kantonalbank.