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Men in Suits

Morgan Stanley links the New Climate Investment Platform's incentive compensation to emissions reduc

Updated: Dec 21, 2022

Morgan Stanley Investment Management (MSIM) announced the launch of 1GT, a new growth-oriented private equity platform designed to invest in climate solutions firms that will eradicate 1 gigaton of CO2 emissions by 2050.

The company indicated that fifty percent of the 1GT team's incentive compensation will be contingent on achieving the platform's climate goals.

According to Vikram Raju, Head of Climate Investing at MSIM, the launch of the strategy satisfies the "need to radically alter the traditional model of private equity impact investing in three ways" by incorporating concrete and ambitious climate goals, tying financial incentives to those goals, and providing limited partners with transparent measurement of the goals.

Raju said:

With a 1GT target and a 50 percent carry-through rate, we have attempted to achieve this.

The new platform will invest largely in private enterprises in North America and Europe that produce products and services that enable significant reductions in carbon footprints and may provide a significant financial return. Thematic areas for investments will include mobility, energy, sustainable food and agriculture, and the circular economy.

Raju will manage 1GT, a team that, according to MSIM, has allocated nearly $600 million in finance to enterprises working to mitigate climate change since 2015.

Navindu Katugampola, Global Head of Sustainability for MSIM, stated:

"1GT is another example of MSIM's commitment to making new solutions and market-leading products that help our clients deal with time-sensitive sustainability issues while meeting their fiduciary obligations to their investors."

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