The majority of climate impacts are generated where capital is allocated. In 2021, CDP estimated that the finance sector’s financed emissions are on average more than 700 times higher than the sector’s direct emissions. Despite this, only a small number of investors report measures to align their investments’ climate impact with the goal of limiting global warming to well below two degrees.¹ To mitigate climate change, owners must therefore not only be able to understand the climate impact of their investments, but also actively steer them towards low‑carbon solutions.
Pontos Group is an active and long‑term real estate and private equity investor operating in Finland, Estonia, and Portugal. The company focuses on investments that are socially, environmentally, and economically sustainable, and considers mitigating climate change a core responsibility. As sustainability lies at the heart of Pontos Group’s operations, understanding the climate impact of its investments is also a fundamental part of its ownership activities. In this blog post, we describe how we at UseLess have worked together with Pontos Group to assess climate impact and leverage this information in active ownership.
How to assess the climate impact of investments?
Assessing the climate impact of investments begins with carbon footprint calculation. In Pontos Group’s case, this means that:
- the greenhouse gas emissions of investments are mapped comprehensively, taking into account the carbon footprint generated both by the portfolio companies’ own operations (scopes 1 and 2) and across their value chains (scope 3),
- the carbon footprint of each portfolio company is allocated to Pontos Group based on ownership stake, and
- in addition to portfolio companies, the carbon footprint of other investments, such as private equity funds, is also included in Pontos Group’s total carbon footprint based on ownership stake.
The carbon footprint of portfolio companies is categorized in different ways depending on Pontos Group’s ownership stake and its ability to influence each company’s operations:
- For wholly owned subsidiaries, as well as portfolio companies in which Pontos Group has a significant ownership stake and substantial influence over operations, carbon footprint categories (scopes 1, 2, and 3) are included directly in Pontos Group’s own carbon footprint.
- For portfolio companies in which Pontos Group holds a smaller ownership stake and has limited ability to influence operations, emissions are accounted for in category 3.15 (investments).
- Similarly, other investments, such as private equity funds, are fully categorized in category 3.15.
This categorization helps in understanding the emission sources Pontos Group can influence the most.
Pontos Group’s own operational carbon footprint is relatively small and consists primarily of emissions related to office‑based activities, such as procurement and business travel. Assessing the carbon footprint of investments provides a more realistic picture of the total climate impact. In addition to monitoring the development of its own carbon footprint, Pontos Group also analyzes climate impacts at the portfolio company level. Pontos tracks the annual development of both its own and its portfolio companies’ carbon footprints.
Carbon footprint calculation helps the owner to identify:
- where the most significant climate impacts of investments are generated,
- which companies or properties are critical from a climate perspective and require urgent actions, and
- how climate impacts are distributed across different asset classes.
Once climate impacts have been made visible, the owner can move to the next phase: taking action.
Using carbon footprint calculations in ownership steering
The real impact of carbon footprint calculation only materializes when the results are used in decision‑making. In the case of Pontos Group, carbon footprint calculations provide concrete support for active ownership and developing portfolio companies towards more sustainable business practices.
Our role at UseLess is to act as an interpreter: based on data received from portfolio companies, we can identify the key sore points but also opportunities from a climate perspective. Based on this, Pontos Group can engage in discussions with its portfolio companies on, for example, which emissions can be influenced and over what time frame. Without data, it would not be possible to assess which actions truly matter from a climate perspective.
“We are building our climate and sustainability work together with our portfolio companies. The analytics provided by UseLess bring the necessary precision and reliability to our work, enabling us to make the right decisions and to target our actions effectively”, says Päivi Tomula, Investment Director of Real Estate at Pontos Group.
Understanding the carbon footprint of investments enables meaningful impact
Future investing is increasingly about combining sustainability, impact, and strategic ownership. For a long‑term owner such as Pontos Group, monitoring climate impacts is not an additional burden but a tool for creating value and guiding portfolio companies towards more sustainable practices.
“For us, sustainability perspectives are an integral part of value creation. Understanding climate impacts guides both our investment decisions and our long‑term ownership activities”, Tomula summarizes.
We are delighted to continue our partnership with Pontos Group on themes related to sustainable investing.
If you are also considering how the climate impact of investments could be made a core part of your ownership activities, book a free 30‑minute meeting with one of our experts or leave us a contact request. We are happy to support you on your journey towards more sustainable investing.
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