EQT Infrastructure: Assessing Investment Portfolios to Address and Mitigate Nature-related Risks

We had no absolute path of where to go – an unusual way for us to work with a consultant. We appreciated the collaborative way of working, exploring together and shaping the work.  - EQT Infrastructure

 

Vision Statement

EQT is one of the world’s largest private equity investors, managing EUR 242 billion in assets. With a commitment to sustainability, EQT’s vision is to invest in ways that maximise returns for clients while also contributing to long-term sustainable growth. 

 

Project Purpose – managing portfolio risk that were most exposed to nature-related risks

EQT sought to enhance its approach to managing nature-related risks within its portfolio, specifically within its infrastructure business segment. The goal was to engage with portfolio companies that were most exposed to nature-related risks and help them reduce physical or transition risks, ultimately protecting or enhancing the valuations of these investments.

 

Challenge – clear actionable steps for companies to assess within its portfolio

EQT Infrastructure needed to systematically assess its portfolio for nature-related impacts and dependencies. They aimed to create a comprehensive risk heatmap while providing clear, actionable steps for investee companies to address and mitigate nature-related risks.

 

Our Approach

To address this challenge, our consultants integrated the ENCORE and SBTN materiality tools with sustainability data provided by EQT. We delivered an integrated quantitative analysis and scoring for each company’s exposure to nature-related risks.

 

Step 1: Gathering data through a simple questionnaire 

We supplemented the company-specific sustainability data with a simple questionnaire. The questionnaire aimed to determine whether the companies own, develop, or operate sites, whether these sites are greenfield, brownfield, or rural, which high-impact raw materials the companies are most dependent on (based on the SBTN list), and the degree of influence each company has on its sustainable procurement practices. This data enabled our team to identify the top two high-risk raw materials for each company. 

 

Step 2: Creating Fact Sheets 

We produced 2-page fact sheets detailing the key risks, impacts and practical actions investee companies could take to manage the associated risks.   

 

Step 3: Providing Practical Guidance for Stewardship 

To aid effective stewardship and engagement, we provided EQT with a summary table detailing practical steps for portfolio companies to undertake within four categories of nature-related risk: location, site operation, supply chain, and strategy and influence. 

 

Step 4: Bespoke Guidance for High-Risk Companies 

For the six highest risk companies, we offered bespoke guidance on the nature of their risks, the kinds of questions EQT could ask to understand those risks better and suggested actions to mitigate the risks. The results were presented to all portfolio companies alongside a Q&A session.   

 

Step 5: Deep Dive Analysis for High-Risk Companies 

To further support EQT, we conducted in-depth analysis for two companies using our proprietary location-specific biodiversity risk assessment tool. These companies—a solar energy operator and a waste-to-energy business—were identified as having high biodiversity risks. Our analysis aligned to the TNFD reporting framework, providing valuable insights into how to manage identified risks.

 

Outcome

Our work provided EQT with pragmatic, action-oriented insights into the nature-related risks within their infrastructure portfolio. The analysis was informed by key market standards, portfolio-specific data, and our team's experience with similar companies, which made the engagement more relevant and actionable for EQT. 

We facilitated portfolio company engagement through webinars, where we presented the findings and shared practical examples of sustainable solutions, drawn from our team’s direct experience with infrastructure companies. 

As a result, two EQT portfolio companies—one in waste-to-energy and another in retirement village development—have expressed interest in taking the next steps to manage their nature-related risks and capitalise on opportunities for sustainable growth.