Net Zero: from Commitment to Implementation

Net zero is becoming increasingly important for investors, but the conversation is starting to change. The focus is moving beyond whether firms have made a commitment, towards whether they can demonstrate credible progress.

GRESB provides a good indication of this shift. In its 2025 Real Estate Assessment, 81.5% of real estate entities had a net-zero policy in place, up from 72.4% in 2023. The 2026 preliminary results show that this figure went up to 84%! The proportion with net-zero targets also increased significantly, from 50.4% to 66.4%. At the same time, the proportion making formal net-zero commitments remained broadly flat, with the 2026 preliminary results showing that 61% of the Participants still don’t have any. GRESB describes this as a shift from ambition towards implementation.

For private equity, however, implementation is not always straightforward.

From LP expectations to portfolio action

We have covered the basics of the definitions of General Partner (GP) and Limited Partner (LP) in our previous blog article here. A recent study highlighted the growing number of climate requirements appearing in LP side letters. One GP reported that, of around 100 side letters reviewed, 82% included a climate requirement in 2025, compared with 17% in 2019.

But having a requirement is one thing; delivering meaningful emissions reductions across a portfolio is another.

Private equity portfolios can contain businesses with very different emissions profiles, growth trajectories and levels of maturity. Absolute emissions reduction targets can also be difficult for growing companies, particularly where growth is driven by acquisitions.

This creates a practical question for GPs: how do you establish a credible approach to decarbonisation without applying the same expectations to every company, regardless of its circumstances?

What does implementation look like?

First, focus on where it matters most. Effort can be prioritised towards companies and emissions sources where there is BOTH

• material impact; AND
• the greatest ability for the GP to influence change.

Second, be pragmatic about data, so often a sticky point. Where emissions are relatively immaterial, or good-quality data is difficult to obtain, reasonable estimates can provide a useful starting point rather than becoming a barrier to action.

Third, bring the climate agenda closer to the investment team. Deal-team champions, portfolio KPIs and board-level reporting can help make decarbonisation part of normal portfolio management rather than something owned solely by the sustainability function.

And finally, connect net zero to commercial value. Customer requirements, procurement processes and competitive pressure can often provide a more immediate incentive for management teams than LP reporting requirements alone.

Finding the right framework

The question of methodology is also becoming increasingly important. As expectations around decarbonisation mature, GPs are faced with a growing range of frameworks, targets and reporting approaches. The challenge is often less about a lack of guidance and more about determining which approaches are practical, proportionate and useful for their portfolios.

Different companies will face different starting points, emissions profiles and opportunities for action. A credible approach therefore needs to provide enough structure to measure and communicate progress, while allowing for differences between sectors, business models and levels of maturity.

For private equity, this means finding a balance between consistency and flexibility. Rather than applying a single approach across every portfolio company, GPs may need to consider where emissions are most material, where they can have the greatest influence, and what level of action is realistic for each business.

The objective is not simply to select a framework or set a target, but to establish an approach that helps investment teams understand priorities, track progress and communicate it credibly to LPs.

The next phase of net zero

The direction of travel is becoming clearer. As net-zero expectations become more established, the focus is increasingly shifting towards what happens after the commitment is made.

For private equity, this means embedding decarbonisation into portfolio management, identifying where action can have the greatest impact, and developing ways to measure and communicate progress.

The question is therefore becoming less “Do we have a net-zero target?” and more:

“Where can we have the greatest impact, what action is commercially relevant, and how can we demonstrate progress?”

For GPs, the next phase of net zero is likely to be about turning commitments into practical, measurable and commercially relevant action across the portfolio.