On Wednesday, Swedish private equity and real assets investor EQT announced the launch of a potentially huge new impact investment fund. EQT’s Future Fund, which will aim to raise EUR 4 billion (about $4.7 billion), will be an impact-driven, longer-hold fund. The fund will target investments in maturer companies with the potential for “market-shaping impact potential,” and where transformational change requires a longer ownership timeframe. A portion of the EQT Future Fund’s carried interest will be linked to the achievement of portfolio-level impact KPI’s, including reduction of greenhouse gas emissions.
According to an announcement from EQT, the Future Fund will invest in line with a trio of key objectives; Planet, People and Prosperity. Additionally, every investment in the EQT Future Fund portfolio will have a clear impact thesis, with an Impact Acceleration Plan for achieving asset-specific and portfolio-level KPI’s. Specifically, these KPI’s are reduction of GHG emissions according to Science-Based Targets, improved employee well-being as reflected in industry top-quartile eNPS (Net Promoter Score), and increased gender diversity, as demonstrated by progress toward 50/50 parity within the top 20 percent of earners in each portfolio company.
Up to 20 percent of EQT Future Fund’s total carried interest will be linked to achieving the aforementioned KPIs.
A top-level Mission Board will provider strategic direction and impact-focused advice to the Fund, co-chaired by former Unilever CEO, UN Sustainability Ambassador and co-Founder of the social enterprise initiative IMAGINE, Paul Polman, along with Investor AB Chair and ABB and Ericsson Vice-Chair Jacob Wallenberg.
“There is an enormous opportunity to invest in businesses that give back more than they take and I am a firm believer that success will come to those who focus on solving the world’s problems,” Polman said in a comment on the fund launch. “I share this mindset with EQT and I am therefore excited to join the EQT Future Mission Board to support a strategy clearly geared towards investing in companies that are, or have the potential to change industries for the better.”
“EQT Future is an important strategic move for EQT as a firm,” added EQT CEO and Managing Partner Christian Sinding. “Together with our Science Based Targets and EQT Future’s impact-driven investment thesis, we are raising the bar for EQT and all our investment strategies. By combining EQT Future with our firm-wide approach to embed positive impact into every investment, we have the best possible foundation to grasp the most exciting opportunity, and responsibility, of our time – to support businesses that can accelerate transformational change for the benefit of the environment and society at large.”
Last week, EQT became the first private markets investment firm to formalize science-based targets for its portfolios via the Science Based Targets Initiative (SBTi), a partnership between impact disclosure non-profit CDP, the United Nations Global Compact, World Resources Institute (WRI) and World Wide Fund for Nature (WWF). By 2030, the company has committed to reducing its own direct emissions by 50 percent, its indirect emissions from business travel by 30 percent, ensuring 100 percent of its portfolio companies will have their own SBT’s validated by 2030, and reducing indirect emissions in its real estate funds by 55 percent per square meter floor area.
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