Apollo Global Management has shown significant improvement in its climate risk management, achieving a higher grade in a recent scorecard that evaluated the energy portfolios of private equity firms.

Commitment to Renewable Energy

This improvement is attributed to its commitment to avoid investing in fossil fuels in its latest buyout fund. The scorecard, developed by a coalition of nonprofit organizations, highlights the increasing scrutiny on private equity firms regarding their environmental impact and energy investments.

Different Approaches in the Private Equity Sector

Despite Apollo's progress, it still lags behind smaller competitors like EQT, a Swedish firm with a more renewable energy-focused portfolio. This contrast highlights the different approaches within the private equity sector in addressing climate risk and energy transition.

Concerns about Fossil Fuel Investments

The report reveals that a majority of the energy portfolios analyzed are heavily invested in fossil fuels, raising concerns about the climate implications of these investments. The combined energy portfolios of the firms are responsible for significant greenhouse gas emissions, emphasizing the need for accountability and transparency in the private equity sector.

Challenges in the Industry

The report also highlights the challenges posed by the industry's structure, which can limit accountability and oversight. The authors argue that institutional investors with allocations in private equity face financial and climate risks due to exposure to polluting assets.

Rethinking Investment Strategies

The findings of this report may prompt a reevaluation of investment strategies in the private equity sector, with firms that prioritize transparency and accountability potentially better positioned to meet the expectations of socially conscious investors.