When talking about sustainability, one cannot avoid the subject of carbon emissions. In order to combat global warming, it is of great importance that emissions of CO2 and other greenhouse gases are drastically reduced. Therefore, at VP Capital, we started mapping our carbon footprint in 2018 and taking measures to reduce it. We also decided to offset all our remaining carbon emissions.
For VP Capital the largest part of the emissions is indirect, namely from the companies in which we invest. We consider the scope 1 & 2 emissions of these companies, at the level of our participation, as our (shared) responsibility and therefore we include them for a large part of our investments in the calculation of our footprint. We currently use the following addition to calculate our footprint:
- VP Capital's scope 1+2 emissions: energy consumption of our office environment and impact of our company vehicles;
- The scope 3 emissions of VP Capital other than investments: our business travel, commuting, waste and the upstream emissions of scope 1 and 2;
- The scope 1+2 emissions from our direct majority-owned investments (VP Energy, VP Landbouw, Batenburg Techniek, HAVEP, Q-lite, Hydrowear);
- The scope 1+2 emissions from our direct investments in real estate.
Carbon Neutral Company
Offsetting emissions is possible through the purchase of certified 'carbon credits'. These credits are subject to very strict requirements and conditions, to guarantee that they actually contribute to a decrease in greenhouse gas concentration in the atmosphere. VP Capital has been offsetting its emissions this way since 2019 and may therefore call itself a 'carbon neutral company', just like our portfolio companies VP Landbouw, Batenburg Techniek, HAVEP, Q-lite and Hydrowear.
For the calculation and compensation of emissions VP Capital works together with CO2logic, a recognized carbon specialist. The 'Verified Carbon Standard (VCS)' carbon credits we purchased were generated in the following two projects:
- Reforestation & Conservation Zambia:
a reforestation project that teaches farmers farming methods that improve their livelihoods while protecting the forest. This is done through recognized sustainable land management and the REDD+ method (Reduce Emissions from Deforestation and forest Degradation). The project supports over 8,600 farmers and ensures the conservation of more than 25 million trees.
- Certified Climate Project Wind India:
a project involving the construction and installation of 223 wind turbines with a combined capacity of 233 MW. The project will supply clean, renewable energy to the electricity grid in three regions of India and stimulate the transition to a low-carbon economy.
Reduction 2021 compared to 2019 and 2020
The table below shows the number of tons of CO2-equivalent emissions of VP Capital in 2019, 2020 and 2021. It can be seen that emissions decreased significantly in 2020 and increased slightly again in 2021 for many of the portfolio companies. A plausible explanation is that many business activities were temporarily on hold in 2020 due to COVID-19. Furthermore, the increase at Q-lite can be explained by an expansion of business activities. We only include emissions from our direct real estate and Hydrowear in our footprint calculation since 2021; for comparison purposes, we set 2019 emissions equal to 2021 emissions. Overall, we see a total emissions reduction of 16% compared to 2019.
CO2 compensation via WeForest
Science Based Targets
We want to reduce our CO2 emissions such that we are in line with the climate agreement (climate warming < 1.5°C). To determine the targets needed to achieve this, we have joined and committed to the Science Based Targets initiative, a collaboration between Carbon Disclosure Project (CDP), UN Global Compact (UNGC), World Resources Institute (WRI) and World Wildlife Fund (WWF).
To this end, we have established reduction targets that have been validated by the SBTi against the principles and conditions that apply to financial institutions and private equity investors. In April 2022, our targets were officially approved.
Our Science Based Targets are:
- Scope 1+2 emissions: 46% reduction by 2030 compared to 2019. Use of 100% green electricity;
- Scope 3 real estate investments: 73% reduction in emissions per m2 in 2030 compared to 2019;
- Scope 3 other investments: 53% of our private and publicly traded investments have validated Science Based Targets themselves by 2030.
These targets relate to VP Capital's own emissions, the companies in which it invests directly (HAVEP, Batenburg Techniek, Mediahuis, Q-lite, VP Landbouw and VP Textile), its real estate portfolio and listed companies, in total approximately 85% of VP Capital's total investment portfolio.
More on this initiative: Science Based Targets Companies
In the coming years, VP Capital will of course work towards the realization of the above-mentioned climate targets. We will report annually on the progress in this regard, and on the actions we are taking.
However, after realizing the targets by 2030 at the latest (earlier is also possible), we are not there yet. Further reduction of emissions is needed, towards 'Net Zero'. This means that emissions are reduced to an absolute minimum and that any remaining emissions are neutralized in some way.
VP Capital plans to commit to these Net Zero targets as well. However, the guidelines and criteria involved are still under development for financial institutions and private equity investors and will not be set until 2023.
We are currently exploring whether we can invest more directly in projects that reduce greenhouse gas emissions. This would allow us to offset our emissions in the future with carbon credits from our own investments. We have now joined a small project involving the restoration and planting of a mangrove forest in Brazil. If that goes well, it can be scaled up.
The amount of greenhouse gases in the atmosphere can also be lowered by absorbing additional carbon into the soil. To further explore this, VP Landbouw and VP Capital have started a collaboration with Soil Heroes.