Milan, 13 November 2023 – IGI Private Equity, an independent asset management company specializing in capital investments in small and medium-sized Italian companies, has launched a project with Prometeia – a leading consulting firm that has been active in the field of sustainability and private markets for years with a dedicated team – to assess the exposure of its investment portfolio to climate risks.
The agreement stems from IGI’s desire to respond to the growing attention at national and European level to the integration of ESG risks, in particular those related to climate and the environment, into the strategic and operational model of financial operators. IGI, which has already incorporated ESG analyses into its investment process with the help of Prometeia, has therefore decided to extend the assessment of its portfolio companies to climate risks, both in the due diligence phase and through periodic monitoring.
On the strength of the expertise gained in sector and real estate analysis, Prometeia applies an articulated and complete model for climate risk assessment to the asset management sector, in particular to the world of investments in private assets.
The model makes it possible to assess exposure to climate risks both at the individual company level and at the aggregate portfolio level based on various future scenarios. The model takes into account the impacts of both transition and physical risk. On the one hand, the risks associated with a transition to an economy with a lower environmental impact on the balance sheet of the portfolio companies are analyzed, and on the other, the exposure of the companies’ buildings to the increase in size and frequency of environmental risks such as floods, fires and landslides.
The presence of a solid ESG data collection framework has allowed IGI to correlate the specific data of the individual companies in relation to the emissions and energy consumption profile within the climate risk assessment model. This also makes it possible to assess their positioning within the reference sector and in many cases to estimate the best positioning of the same companies compared to the sector benchmark.
Matteo Cirla, Chief Executive Officer and Head of Sustainability at IGI Private Equity said: “IGI has put considerable effort into integrating sustainability factors into its investment processes but recognizes that the environmental and climate challenges we face are constantly evolving. The growth in the collaboration with Prometeia represents an important step in this direction, allowing us to gain a better understanding of the climate risks which our portfolio is exposed to and to manage them appropriately. At IGI we are aware that we play an important leadership role in the transition of the companies which we invest in, not only in terms of size and organization, but also in support on the path of sustainability. We believe that understanding potential climate impacts makes us more informed and responsible investors.”
Claudio Bocci, Partner at Prometeia and Head of Asset Management, commented: “The issue of climate change risk is becoming increasingly central to the European regulator’s agenda and institutional investors’ attention to the analysis of portfolios’ exposure to climate risk is growing rapidly. With the adoption of this valuation framework, which is already widely recognized in the banking sector and by supervisory authorities, IGI is positioned as a best practice among Italian private markets asset managers.”
Gianmatteo Guidetti, Principal Prometeia and coordinator of the project, summarized the main benefits deriving from the adoption of a climate change risk assessment model as follows: “The model adopted by IGI, in addition to responding directly to the recommendations of the main international ESG frameworks, represents a robust tool, capable of identifying the principal climate risks to which a portfolio is exposed and implementing actions to prevent unexpected impacts on business. The use of this tool, in the due diligence phase, can also support asset managers in identifying investment opportunities related to the transition to a low-carbon economy. Finally, assessing exposure to climate-related risks allows investors to effectively demonstrate and communicate to investors their commitment to identifying and managing these risks.”