UN-backed investor alliance sets climate targets for private markets

Members of the UN-convened Net-Zero Asset Owner Alliance are setting climate targets for their private market investments, bringing private equity, infrastructure, real estate and private debt within the same climate ambition as listed assets.

Under the alliance's updated target-setting Protocol, members are due to publish targets for new investments in private equity funds, privately held debt and infrastructure funds by the end of 2026.

The alliance, which has 85 institutional members managing US$10.5 trillion, said in its 2026 progress report data limitations and diverse investment structures remained important challenges in private markets.

"Private markets cover a wide range of strategies and asset classes, from private equity and infrastructure to real estate and private debt. Their differing ownership structures, investment horizons, data availability and levels of influence require tailored approaches rather than a single methodology," the report read.

"While climate disclosure is generally less developed than in public markets, private assets can offer direct relationships with managers and portfolio companies.

"Asset owners can therefore act while improving data quality by requiring credible transition plans, engaging managers and companies, and monitoring progress using reported or, where necessary, estimated emissions."

To tackle the issue, the report noted signatories are working to frame considerations for individual asset-specific target-setting, engaging with external asset managers and using more consistent climate information.

The progress report added better data alone does not solve implementation challenges and signatories' discussions highlighted transition targets need to reflect the characteristics of different private assets.

"A buyout investment, for example, offers a different level of ownership and influence than venture capital, private debt or a fund-of-funds allocation," the report read.

"Credible implementation therefore requires asset owners to select approaches suited to each strategy and retain sufficient flexibility to reflect differences in ownership, investment horizons and available climate information as methodologies and market practices evolve."