Climate action is a strategic priority for Sarona
Climate change is already impacting the economies in which we invest. These changes are disrupting livelihoods, threatening natural ecosystems, and putting pressure on vulnerable communities.1,2,3
Climate action is a strategic priority for Sarona, shaping how we align capital with our commitment to climate solutions. We invest in companies that support the transition to a low-carbon, climate-resilient economy. Our portfolio spans emerging markets across Southeast Asia, Latin America, and Africa—regions that face both high climate vulnerability and significant opportunities for sustainable growth. In these countries, it is critical to enable development that minimizes emissions while preparing our portfolio for future climate risks. Each market has a different starting point in terms of climate vulnerability and development needs. That is why we believe climate action must address not only environmental goals but also social realities.
Integrating Climate into Investment Decisions
Sarona integrates climate considerations across our fund investment processes—from due diligence, investment decision, and portfolio monitoring. Climate-related risks differ from traditional investment risks and require careful evaluation. During due diligence, Sarona assesses each investment’s exposure to extreme weather, regulatory changes, market shifts, and GHG emissions. We also look for climate resilience and opportunities for innovation that support mitigation and adaptation.
Once invested, Sarona integrates climate factors into ongoing portfolio management. This involves regular monitoring and engagement with investee companies to encourage transparency and accountability regarding climate actions. Sarona actively supports investees in adopting climate policies, tracking GHG emissions, and enhancing climate resilience, mitigation and adaptation through strategic business adjustments.
Sarona has adopted internationally recognized frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) and International Sustainability Standards Board (ISSB) guidelines to enhance transparency and accountability. Using the Joint Impact Model, we established baseline greenhouse gas emissions for our entire portfolio. Additionally, we actively support our fund managers in effectively reporting climate risks and setting ambitious yet realistic emission reduction initiatives.
Sarona conducted a GHG emission hotspot analysis of the SGGM portfolio using the Joint Impact Model, covering 128 companies in 26 countries. The estimated total Scope 1, 2, and 3 emissions from these companies in 2023 amounted to 16 million tonnes of CO2 equivalent. Given Sarona’s average ownership stake of 1-2% in these companies, the portion of emissions attributed to Sarona’s financed emissions is 179K tonnes of CO2 equivalent. This figure reflects Sarona’s proportional responsibility for the environmental impact of the portfolio companies.
Sarona aims to invest in funds focused on companies or projects that are reducing emissions, such as renewable energy, energy efficiency, sustainable transportation, and innovative technologies or clean tech.
Climate action integration among Sarona fund managers
There is growing evidence that Sarona’s partner fund managers are beginning to integrate climate considerations into their governance and operations.
Our recent survey among 24 fund managers shows the following progress:
- 71% have developed environmental improvement plans for their portfolio companies.
- 58% are elevating climate-related issues to board or senior management discussions.
- 54% are tracking GHG emissions across their portfolios while 38% track emissions at the firm level.
- 38% have dedicated climate-focused staff.
- 29% have made direct investments in climate-related sectors such as renewable energy, climate technology, or adaptation solutions.
- 40% of fund managers have defined key performance indicators (KPIs) related to climate outcomes, and 30% have published environmental disclosure reports.
- 21% are aligned with global reporting frameworks, such as the Task Force on Climate-related Financial Disclosures (TCFD) and the International Sustainability Standards Board (ISSB).
These efforts demonstrate commitment to climate action, although the degree of integration varies across Sarona fund managers.
Assessing and Managing Climate Risks and Opportunities
The World Economic Forum’s Global Risks Report 2025 ranks the most severe global risks over short-term (2 years) and long-term (10 years) periods. In the short term, misinformation, extreme weather, and armed conflict top the list. Over the next decade, environmental risks dominate, led by extreme weather events, biodiversity loss, and critical Earth system changes. https://reports.weforum.org/docs/WEF_Global_Risks_Report_2025.pdf
Our recent survey of 24 fund managers in emerging markets, along with the 2025 Global Risks Report, shows that climate change brings both short-term risks and long-term opportunities. Sarona’s fund managers have flagged several climate-related risks that could affect portfolio companies as climate change accelerates:
Physical risks, such as extreme weather and shifting environmental conditions include:
- 80% of fund managers indicated that capital costs could increase due to damage to physical assets. Extreme weather events might lead to repairs or the need to upgrade facilities.
- 73% warned of potential revenue losses from production delays. Climate disruptions could impact transportation or shut down supply chains, leading to slower operations and unmet customer demand.
- 51% noted that operating costs might rise due to water shortages. Water is essential for running hydroelectric plants and cooling systems in fossil fuel or nuclear energy generation. If water becomes unreliable, keeping energy systems running becomes more expensive.
Transition risks relate to the shift toward a low-carbon economy, including changes in policy, technology, and market dynamics:
- 53% expect that raw material costs could increase as industries adjust to new demand patterns and more complex sourcing challenges.
- 40% raised concerns about regulatory changes that might impact existing products or services—especially for companies reliant on outdated standards.
- 40% also pointed to the cost of switching to lower-emission technologies. Transitioning may require upfront investments in new systems and infrastructure that only pay off over time.
Climate Opportunities: What Fund Managers Are Seeing
The same fund manager survey highlights a range of climate-related opportunities emerging across diverse portfolios. The most commonly cited opportunity is the use of recycling, with over half of the fund managers identifying it as a key area of focus. Close behind are lower-emission energy sources and efficient production, both at 47%, pointing to strong momentum around cost-saving and emissions-reducing solutions.
New tech and market access are also key, each cited by 37% of respondents—signaling where innovation and expansion are happening.
Around one in five managers are betting on low-emission products, consumer preferences shifts, and renewables adoption. These reflect growing demand for sustainable goods and services.
While fewer, some are exploring carbon markets, decentralized energy, and policy incentives—emerging but high-potential spaces.
Overall, the shift is clear: from managing climate risks to capturing climate opportunities.
Portfolio highlight: Addressing Scope 1, 2, and 3 GHG Emissions at XpressBees
XpressBees Logistics Solutions Pvt. Ltd., a leading logistics provider reaching 5,000 locations in India, is integrating sustainability into operations. The company delivers more than 2 million packages daily and is working to reduce emissions across all scopes:
- Scope 1 (Direct Emissions): XpressBees monitors fuel use and is phasing out inefficient vehicles. Currently, 1% of its fleet uses compressed natural gas (CNG).
- Scope 2 (Indirect Energy Emissions): The company tracks electricity consumption and follows standard procedures for energy and water conservation.
- Scope 3 (Value Chain Emissions): In 2024, XpressBees recycled 590 tons of plastic waste, much of it repurposed into useful products like pipes.
This case shows how practical and scalable measures—fleet upgrades, energy efficiency, and circular waste systems—can contribute to more environmentally sustainable operations and lower emissions.
Making Climate Action Real: Lessons learned
Climate action often feels abstract, but our experience tells a different story. What makes a difference on the ground is not grand strategies—but everyday decisions. A logistics company switches to cleaner fuel. A packaging manufacturer replaces plastic with recycled material. A solar firm expands into underserved rural markets. These are not isolated wins—they are part of a broader shift we see across our portfolio.
What we have learned is this:
Start small, measure what matters, and grow from there. Whether it is a fund manager learning to track Scope 3 emissions for the first time, or a business adjusting operations after a flood, progress is built on practical steps.
For Sarona, climate action is not a standalone initiative. It is woven into our investment strategy, risk assessments and impact goals. And we are just getting started.
We welcome collaboration. If you are a fund manager, investor, or entrepreneur working in emerging markets and navigating the realities of climate risk, let’s talk. Together, we can turn ambition into action.
1. https://www.weforum.org/stories/2025/03/rising-sea-levels-global-threat
3. https://www.sciencedirect.com/science/article/abs/pii/S2211464523001379
