Decarbonization isn’t just about managing risks—it’s also a powerful driver of value creation. That dual perspective was the central theme of a recent roundtable hosted by APG, PGGM, and the New York City Comptroller’s Office in New York City. Keren Raz, Senior Responsible Investment Manager Global Private Equity at APG, shares her insights.
Published on:
10 November 2025
In brief:
• One goal of the roundtable was to debunk the myth that decarbonization is purely a cost.
• The focus was on revenue at risk from climate change, opportunities, and value creation.
• The response from attending General Partners (GPs) was positive and action-oriented, with plans for a follow-up session next year.
More than 40 U.S. middle-market GPs attended the event, which focused on this segment because it lags behind Europe in decarbonization efforts, explains Raz. “This was the second annual decarbonization workshop, after a first successful engagement last year. U.S. middle-market firms are typically smaller and have only recently begun building ESG expertise, while larger private equity firms have been investing in ESG and decarbonization. That’s why it’s important to partner with US middle market firms now—encouraging them to engage consultants, share best practices, and accelerate their decarbonization efforts.”
How did companies respond to the idea of decarbonization as a value driver?
“One reason we focus on the U.S. is the prevalence of myths we need to challenge. At APG, decarbonization matters not only for climate change but also because it presents clear opportunities for value creation and risk management. In the U.S., there’s still a perception that decarbonization is just a cost, potentially conflicting with fiduciary duty. We wanted to shift that narrative and emphasize the business case for decarbonization.”
What are some examples of value creation?
“Cost savings is a prime example. Reducing energy or fuel consumption lowers expenses—especially relevant given high energy prices in the U.S. Another example is revenue growth. Many large companies have net-zero targets, and private equity portfolio companies often serve as suppliers. If they can help their clients meet those targets, they become more attractive partners. A great case from Europe: a company in our private equity portfolio won a major contract over larger competitors because it was able to help the customer achieve its net-zero goals.”
Participants received tools and guidance for reducing greenhouse gas emissions. How practical and ready-to-use were these resources?
“We organized two rounds of workshops—five in each round—facilitated by consultants who provided concrete handouts and guidance. One session was ‘Decarbonization 101,’ offering a starter pack with frameworks and first steps. Another focused on climate due diligence, and a third on operational excellence in decarbonization, including tips for engaging portfolio companies. In the U.S. market, it’s crucial to make things actionable, so we prioritized practical, hands-on guidance.”
The key is—and always has been—to clearly show the revenue at risk, the opportunities, and the value creation
Does the current anti-ESG sentiment in the U.S. make it harder to promote decarbonization?
“Though there is caution in how firms publicly discuss ESG, I wouldn’t say it’s harder to promote decarbonization than before. The key is—and always has been—to clearly show the revenue at risk, the opportunities, and the value creation. Without a business case, companies won’t prioritize it. We’ve become more precise in how we communicate that case. I did wonder if there’d be resistance at the workshop, but it was actually very optimistic. Attendees focused on case studies and collaboration to realize the business case for decarbonization—bringing together sales, operations, and sustainability teams to align efforts. The mood was positive, and people saw the economic incentives. Private equity firms attending were focused on how to connect with the right people at their firm and at portfolio companies and show the opportunities clearly.”
Isn’t it a bit late to start, considering the Paris Agreement was signed years ago?
“The goal is net zero by 2050, and private equity portfolios typically turn over every 4 to 6 years. So it doesn’t feel too late—but we do feel urgency. Our aim is for U.S. middle-market GPs to measure their carbon footprints and pilot decarbonization initiatives near-term, so they can make stronger commitments by their next fundraising cycle. Many portfolio companies are small and not major emitters, but they still need to act. A challenge in private equity is identifying the levers of influence—often emissions come from scope 3 sources, like data centers in tech. That’s why we need to start now. We’re eager to partner with other Limited Partners and GPs to advance decarbonization. These workshops are a valuable tool, and the feedback has been very positive. GPs are already taking ideas back to their teams, and we’re planning a follow-up session next year.”