Recent months have brought a sense of shifting momentum on sustainability. Net-zero alliances of bankers, insurers, and asset managers have been scaled back or suspended. Major banks have delayed their decarbonization targets. In the US, the Securities and Exchange Commission has paused enforcement of its climate disclosure rule.

Unsurprisingly, investors have grown quieter about their own commitments and progress. But new Bain research tells a different story. A global survey of general partners (GPs) and limited partners (LPs) shows real, if uneven, momentum behind decarbonization in private markets. The Net-Zero Asset Owner Alliance, a coalition of institutional investors convened by the UN that manages, collectively, $9.5 trillion in assets, is phasing private markets into its target setting for the coming years. And firms are already advancing—not with headlines, but with execution, as the “do-say gap” evident in other industries plays out in the world of financial investment.

Almost all investors in our survey factor decarbonization into their due diligence and investment decisions, with the majority seeing decarbonization as a way to support portfolio company performance. LPs include it in their due diligence when assessing GPs. GPs look at it when evaluating assets. Not surprisingly, 70% of GPs surveyed also perceive decarbonization as a long-term creator of value and believe that it enhances appeal to LPs (see Figure 1). To track progress, improve transparency, and align efforts across portfolios, many investors are adopting the Private Markets Decarbonization Roadmap (PMDR) framework.

Kohlberg, a US-based midmarket private equity (PE) firm managing $17 billion in assets, uses the PMDR to track and communicate progress on decarbonization, which it uses as a tool to help portfolio companies identify and capture value-accretive opportunities. In 2021, nearly half the firm’s portfolio companies had yet to begin reporting carbon emissions. By 2024, all portfolio companies were collecting data on Scope 1 and Scope 2 emissions, and 24% of them either had created a decarbonization plan or were already aligned with a science-based transition pathway.

Investors and portfolio companies start from different baselines, and their exposures to regulations and stakeholder pressure varies. Yet, regardless of their specific circumstances, most investors are measuring their performance. Today, 97% of GPs surveyed measure their Scope 1 and Scope 2 emissions, and 84% measure Scope 1, Scope 2, and Scope 3 emissions.

Unless that tracking is put into perspective and managed for reduction, progress will be difficult. More than 40% of GPs and 60% of LPs haven’t measured carbon-intensity changes over the past two years. And while more than 50% of investors have set decarbonization targets and roughly 70% have put their board or C-suite in charge of decarbonization, few employ decarbonization experts, and many don’t even measure their progress.

Decarbonization as a creator of long-term value

Today, 25% of global industrial emissions can be abated with positive return on investment (ROI), and an additional 32% of emissions could become ROI-positive within the next decade as technologies such as batteries and green hydrogen mature. Leading companies are already finding ways to lower carbon and boost business results at the same time. One agribusiness’s efforts to reduce emissions and prevent waste—including controlling toxins in the corn supply chain, enhanced food safety, and improved customer engagement—could have a 9.3 times return.

Decarbonization is also helping companies to better serve customers who are increasingly focused on the issue. A PE-backed Internet infrastructure provider, for example, came under pressure when customers on track for as much as $900 million in annual contracts made greenhouse gas emissions a key purchasing criterion. At the encouragement of its investors, the company set science-based reduction targets, with the aim of eventually reaching net zero and addressing this risk.

How PMDR supports communication and decarbonization

Such success stories underscore that lasting progress depends on consistent measurement and shared accountability—areas in which the PMDR framework is proving pivotal. As the sector continues to collect better data, embed responsibility, and align incentives, measurement will be central to sustained progress.

Developed by the Initiative Climat International (iCI), the Sustainable Markets Initiative's Private Equity Task Force, and Bain & Company, the PMDR framework is now widely recognized across private markets. It provides investors with a common language and structure to classify portfolio companies and track progress consistently across their decarbonization journeys.

PMDR has been rapidly adopted in private markets, with half of GPs surveyed using it today and another 30% planning to adopt it. Among LPs, more than 60% are planning to use it. Ninety percent of users are highly satisfied, with ease of use and features such as automatic visualizations described as key benefits.

Importantly, PMDR gives investors a shared language with which to track progress and closes the communication gap between GPs and LPs, flexibly facilitating internal and external communication and strengthening portfolio-level performance assessment.

Turning measurement into momentum

Private markets’ approach to decarbonization is maturing. Twenty-eight percent of GPs surveyed have made a net-zero commitment, and of those, about 75% are on track to meet them or ahead of schedule (see Figure 2). Decarbonization skills can’t be built overnight. By making tangible progress now, leading companies set themselves up for the performance and value creation boosts that decarbonization is broadly believed to offer.

There is room to improve the quality and comparability of climate data across both GPs and LPs. Today, only one in three LPs surveyed say that they can rely on the data reported by GPs, requiring them to supplement those disclosures with their own estimates. And GPs are seeking better ways to define initiatives with portfolio teams, design pre-investment screenings, and set ambitions and targets across portfolios. Both groups want to engage more with one another.

Three priorities for GPs and LPs

To accelerate progress, investors and portfolio company leaders can focus on three priorities:

• Treat decarbonization as a creator of economic and business value, not merely a compliance requirement. Integrate it into ongoing transformation and commercial excellence efforts.
• Engage early and consistently on climate expectations. During fund-raising and beyond, use standardized reporting rather than bespoke frameworks or feedback loops.
• Act, learn, and improve through iteration. Decarbonization data is not perfect, but pro-active sharing (even when not yet complete) helps refine processes and strengthen capabilities. Some data is better than none.

Private markets are moving beyond pledges and promises toward tangible execution and measurable outcomes. With the clear guidance of the PMDR and the determination to act, investors are transforming carbon reduction into a source of lasting competitive advantage.