Morgan Stanley Investment Management (MSIM) Launches 1GT Growth-Oriented Private Equity Platform Focused on Companies Seeking to Mitigate Climate Change
Morgan Stanley Investment Management (MSIM) has announced that it has launched the 1GT growth-oriented private equity platform (1GT or the Platform) focused on investments in companies that will collectively avoid or remove one gigaton of carbon dioxide-equivalent (CO2e) emissions from the Earth’s atmosphere from the date of the Platform’s investment through 2050, the date by which the United Nations has mandated “Net Zero” must be achieved. Part of MSIM’s $200 billion alternative investments business, 1GT is targeting investments in private companies based primarily in North America and Europe whose products or services enable meaningful improvement in their respective clients’ carbon footprint. The 1GT team has been investing in companies seeking to mitigate climate change since 2015, having deployed nearly $600 million of capital to date through and alongside several impact-oriented investment vehicles. For 1GT, the team will tie half of its incentive compensation (commonly known as carried interest) to the underlying investments collectively catalyzing one gigaton avoidance/reduction in CO2e emissions from the date of 1GT’s investment through 2050.
“1GT is a further example of MSIM’s commitment to providing innovative solutions and market-leading products that help our clients address time-critical sustainability issues while meeting fiduciary obligations to their investors.”
Vikram Raju, MSIM’s Head of Climate Investing and the 1GT Platform, commented: “As COP27 concludes, it is clear now more than ever that we need to radically alter the traditional model of private equity impact investing in three ways. First, we need to seek climate goals that are tangible rather than anecdotal and ambitious rather than tangential. Second, we believe that in order to catalyze meaningful progress in climate solutions, a significant portion of financial incentives should be linked to such climate goals. Third, the measurement of those goals should be transparent to limited partners. With our 1GT goal and 50 percent carry link, we have endeavored to do just that.”
1GT is targeting investments in private companies that will deliver a meaningful financial return and measurable positive environmental impact across the mobility, power, sustainable food and agriculture, and circular economy themes. The Platform intends to leverage Morgan Stanley’s considerable resources to partner with portfolio companies to help monitor ESG risks, increase climate change mitigation, improve ESG monitoring and reporting, and pursue earnings growth, multiple expansion and enhanced exit potential.
Navindu Katugampola, MSIM’s Global Head of Sustainability, commented: “1GT is a further example of MSIM’s commitment to providing innovative solutions and market-leading products that help our clients address time-critical sustainability issues while meeting fiduciary obligations to their investors.”
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Morgan Stanley Investment Management, together with its investment advisory affiliates, has more than 1,200 investment professionals around the world and $1.3 trillion in assets under management or supervision as of September 30, 2022. Morgan Stanley Investment Management strives to provide outstanding long-term investment performance, service, and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide.
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Source: Morgan Stanley