CARBON-CUTTING CAPITAL

Silicon Valley's Bessemer Venture Partners will go “carbon neutral” by the end of the year, a step that few other private equity firms appear poised to take. Jennifer Harris reports.

US venture firm Bessemer Venture Partners has announced plans to offset all of its direct greenhouse gas emissions, beginning this year, in addition to cutting its total carbon emissions 25 percent by 2013.

In addition, the firm will pay to offset the emissions of all its portfolio companies with fewer than 15 employees, and will offer assistance to its larger portfolio companies in developing their own carbon emission reduction programmes.

“As we've expanded our cleantech practice, we've become increasingly aware of the carbon emissions problem,” says Justin Label, a Bessemer partner who launched the firm's cleantech business in 2005. “While recognising that we are a very small business, we decided to do something about it – mainly as a way to learn about the issues.”

Awareness of the “carbon footprint” has begun to make its way into the collective ethos of the corporate world. The Economist Intelligence Unit surveyed 213 companies around the globe last month, and found that 45 percent have a programme in place to reduce their carbon footprints. Of these, 9 percent aim to be carbon neutral by 2012.

Companies can reduce their footprints either by directly reducing their emissions, or by purchasing carbon credits. Most carbon credits are issued under the Kyoto Protocol's Clean Development Mechanism. The programme allows countries to generate tradable carbon credits by investing in carbon reduction programmes in developing countries.

As we've expanded our cleantech practice, we've become increasingly aware of the carbon emissions problem. While recognising that we are a very small business, we decided to do something about it – mainly as a way to learn about the issues

Justin Label

This summer Google said it would go carbon neutral by the end of the year, and in April, Rupert Murdoch said his News Corporation would do likewise by 2010. Volkswagen of America said in August it would offset one year of carbon emissions for all vehicles sold between 1 September 2007 and 2 January 2008.

PIONEERS
But few established venture or private equity firms, even those that invest in green technologies, have announced similar programmes to date.

The handful of pioneers includes Kyoto Planet Capital Partners (KPCP), which launched last month. It is planning to offset its direct carbon footprint, and is currently in the process of writing a manual to help its portfolio companies do the same. KPCP is currently working with portfolio company Cleanairpass on a carbon reduction project. Cleanairpass calculates carbon footprints for its clients, and also administers the purchase of carbon credits.

Environmental Capital Partners (ECP), which also launched last month, is in the process of developing an environmental programme that will include offsetting its carbon footprint. But ECP partner Chris Staudt cautions that purchasing offsets to achieve carbon neutrality should by no means be regarded as sufficient.

“Not all carbon offsets are created equal, and avoidance/minimization of C02 produced is the ideal plan as offsets can often be used as an excuse to continue polluting,” Staudt said in an email. “We are evaluating the best practices in carbon reduction (and other areas) in order to do it the right way from the start rather than merely do it.”

The majority of private equity firms have not yet reached the stage of “merely doing it”. The pressures on them to take action, however, are only likely to increase in the years ahead.