Buyer

Leading the way towards net zero

EQT leverages Patch to make climate action holistic
Problem

To compensate for their unavoidable carbon emissions, EQT wanted to support a collection of frontier carbon removal solutions.

Solution

EQT turned to Patch to create a customized portfolio of credits from frontier carbon removal projects aligned with the social cost of carbon.

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 over 200 companies, more than 1,800 real estate assets, and EUR 92 billion in assets under management.

In 2014, EQT began tracking their greenhouse gas emissions (GHG) and set out in earnest to compensate for the carbon footprint of their operations. Since then, the company has worked hard to try to reduce their emissions, while compensating for those they can’t avoid. 

“From the moment we began our climate journey, tracking GHG emissions and offsetting them was also a way to set a credible example to our portfolio companies,” explains Julia Wikmark, Head of Corporate Sustainability at EQT. 

Nonetheless, their primary focus remains on emission reductions. Becoming the first private equity firm globally to set Science Based Targets (SBTs) in October 2021, EQT has accelerated their aim to transition to a lower-carbon business model across both the company and portfolio. Until these SBTs are fully achieved, however, unavoidable emissions 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’ve been turning to Patch since 2020.

The right carbon credit balance

Patch connects companies of all sizes with trusted carbon credits from an expertly vetted, broad scope of projects. Before 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. 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 by 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 their average credit price has increased exponentially since 2015 and has seen a total increase of more than ten times over as of 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. As a sustainability leader, EQT has developed a contribution model that helps support nascent frontier projects, and provides them with the financing necessary to scale their operations. In this way, EQT aims to scale their 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, and by contributing to frontier technologies, help build foundations for a more sustainable world. With its platform, and the breadth and depth of relationships with project developers, Patch is a great partner with whom to do so.”

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