New Morgan Stanley Strategy Aims to Reduce One Gigaton in CO2 Emissions
Author: Luis Garcia
Morgan Stanley has formed a new growth-capital strategy that aims to invest $1 billion to back companies that will seek to cut a total of one gigaton worth of carbon-dioxide emissions by 2050 - and the bank is tying the strategy’s performance fees to that goal. The 1GT private-equity strategy plans to back growth investments in 20 to 25 companies in areas that include mobility, power, sustainable food and agriculture, as well as the circular economy, said Vikram Raju, head of climate investing at Morgan Stanley Investment Management, the unit launching the strategy. He cited recyclers, energy-efficiency software companies and makers of low-carbon fertilisers as examples of businesses the firm would look to back. The new strategy’s fund has already lined up some capital from outside investors. Morgan Stanley said it has invested around $600m since 2015 in companies that help mitigate climate change through other strategies it manages. Those businesses include an operator of electric vehicle-charging stations and a provider of customer-engagement software that helps utilities reduce energy usage, according to Raju. Each portfolio company would aim to reduce greenhouse-gas emissions equivalent to roughly 50 million metric tons of CO2 by 2050, the year the United Nations has set for the world to achieve its net-zero emissions target, Raju said.