17
Oct’ 2022

Decarbonization of SMEs: the challenges of private equity

This opinion paper was co-authored by CAPZA’s Founder & Executive Chairman Christophe Karvelis-Senn and Aurore Gauffre, Head of Sustainability & Impact. It was published by the French newspaper Les Echos.

Scientists have been warning us for a long time, and current events remind us daily that humanity and the economic model that has allowed it to experience unprecedented development in recent decades are at a crossroads. Global warming, the depletion of resources and energy sobriety, now imposed by new geopolitical tensions, are calling for a change of model.

 

In this necessary revolution, the entire production system must initiate its ecological transition within a short timeframe. And because they are at the heart of our economy, because they employ more than half of the employees in France, SMEs and SMIs are an essential link. Yet today, nearly one out of two SMEs has never calculated its carbon footprint and is therefore unable to manage it.

 

At their side, private equity funds have a crucial role to play. Just as they have supported the digital transformation and internationalization of the French economic fabric in the past, they can not only provide the necessary investments, but they must now also extend their field of action. As a reference shareholder or lender, they must address the extra-financial field, helping them face four challenges.

Investment funds must drive the necessary paradigm shift, acting not only as financiers but also as incubators of change, and putting decarbonization at the heart of their strategy and support.
“ 
Aurore Gauffre, Head of Sustainability & Impact, & Christophe Karvelis-Senn, President

With growing ESG regulations, the first challenge is that of regulation: from 2023, the CSRD directive will require more than 50,000 European companies to analyze their risks and impacts and to produce detailed and audited non-financial reporting. While many of them do not have the necessary resources and skills today, private equity funds can help them navigate the regulatory challenges.

 

The second challenge is to redesign their business model. The ecological transition will require rethinking services, products (low-carbon, circular) and perhaps even the raison d’être of certain companies so that they do not suffer these upheavals, but seize the opportunities. Private equity must foster innovation and finance this transformation.

 

The third challenge is to ensure long-term relationships with clients. Major groups and public institutions are increasingly integrating and analyzing ESG criteria in their calls for tender, and therefore in their choice of partners. Private equity funds can offer tools that facilitate the collection, measurement and transparency of ESG criteria for third parties.

 

The fourth and equally crucial challenge is that of skills and work. There are many needs: training in the new ESG issues, retraining of employees affected by this transition, but also attractiveness with regards to the new expectations from employees who want to work for a more responsible company. In this area, private equity funds can help organizations make climate awareness a unifying factor.

 

 

On these four levels, investment funds must drive the necessary paradigm shift, acting not only as financiers but also as incubators of change, and putting decarbonization at the heart of their strategy and support. Creating and demonstrating environmental and social performance is no longer an option. It is now a discriminating factor for companies and investors alike. To succeed in the transition of SMEs and to survive, investment funds must be champions of decarbonization.

Our expertises
Artemid
Artemid
Senior Loans
The senior financing expert
for small and mid-sized corporates
Read more
More than 80 transactions since 2015
Source: Artemid as of 09/30/2022
Flex Equity
Flex Equity
Flexible financing solutions combining equity and mezzanine
Read more
87 transactions since 2004
Source: CAPZA as of 09/30/2022
Flex Equity Mid-Market
Flex Equity Mid-Market
Tailor-made solutions to accelerate mid-market SMEs in their growth story, transformation and sustainable development
Read more
10 transactions since January 2020
Source: CAPZA as of 09/30/2022
Growth Tech
Growth Tech
A partner of choice for high growth Tech companies
Read more
5 transactions since 2021
Source: CAPZA as of 09/30/2022.
Private Debt
Private Debt
Leading mid-market
direct lender
Read more
120 transactions since 2005
Source: CAPZA as of 09/30/2022
Transition
Transition
Balance sheet solutions at strategic turning points
Read more
Tailor-made support from a team of experts
More news
  • 24
    Nov’ 2022
    CAPZA supports the development of PCE Services
    CAPZA announces an investment in the PCE Services group, a well-known French player in the telecom and energy markets.
    Read more
  • 15
    Nov’ 2022
    Launch of MAIF Dette à Impact Environnemental Fund
    MAIF and CAPZA/ARTEMID launch a dedicated environmental impact debt fund.
    Read more
  • 5
    Oct’ 2022
    CAPZA supports iC Consult in its external growth
    CAPZA arranged a new Unitranche financing to support iC Consult in the acquisition of Kapstone Technologies LLC.
    Read more
  • 5
    Oct’ 2022
    Audensiel acquires a stake in Cognodata in Spain and Mexico
    CAPZA and Sagard have supported the Group in this new external growth operation.
    Read more