Opinion · Sustainability

Zoe Haseman: Transform or Divest: The Debate around Net Zero and Investment Strategy

Zoe HasemanInfrastructure Head of Sustainability

Zoe Haseman considers the opportunities facing private equity to transform industries and drive a low-carbon economy.

Governments, businesses, and investors worldwide are racing to meet their net zero targets. Do you divest your carbon-intensive assets or try to transform them? And where should capital go – into scaling clean technology or managing the transition of carbon-intensive industries? These questions are central to establishing how investors think about investing toward a more sustainable future.

The ripple effect

For EQT Infrastructure, the key is active ownership. By taking majority stakes in companies, we have the potential to shape their future and the industry in which they operate. Through control investments, you can influence what the business does and stands for today and where it’s headed tomorrow.

Private capital has some distinct opportunities to drive a low-carbon economy. For example, investors can bring capital, access to advisers with industry expertise and governance structures to align incentives. The ownership model enables long-term goals to address environmental challenges by scaling businesses, improving their operations and offering relevant solutions through their products and services.

However, many investors have less control over their investments but face the challenge of reducing the carbon footprint of their portfolios. With more limited ability to effect immediate action within the assets they hold, divestment can be their best option. Divesting from carbon-intensive businesses helps reduce their reported emissions in the short term, providing clear and measurable results for stakeholders.

For majority owners, there is a responsibility – and an opportunity – to pursue decarbonization, regardless of the sector the portfolio company operates in. By divesting an asset, you pass the buck to another buyer who may not share the same commitment to responsible ownership. The emissions remain; they just become someone else’s problem.
At EQT, we actively work with our companies to future-proof them – helping them advance their decarbonization efforts, develop more sustainable products and services, and steer them towards a more sustainable future. Of course, we cannot do this in a vacuum. It takes the industry, policy, the market, the macro environment – all those drivers to transform industries. With active ownership and governance, you can lead the change, set the parameters, and collaborate with other stakeholders to create the ripple effects that drive progress.

Transformation goes beyond investing in electric buses and ferries. It requires collaborating with local governments in different jurisdictions to create the incentives and subsidies that help make these investments commercially viable

Zoe HasemanInfrastructure Head of Sustainability

Scale clean technology or transform “dirty” industries?

To achieve net zero, investors need to back and scale clean technologies and transform carbon-intensive businesses. Each operates on different timescales and tackles different parts of the problem.

According to the International Energy Agency, technologies available today, combined with policy measures and investment, could deliver more than 80 percent of the emissions reductions needed by 2030. Investment in renewables needs to continue at a rapid pace. At the same time, scaling newer clean technologies – distributed energy, battery storage and vehicle charging infrastructure – would allow more renewable energy to reach customers, unlocking the decarbonization of industries in the process. At EQT, we heavily invest in these themes.

Transforming carbon-intensive industries can also deliver a big impact. These industries will not transform overnight, but managers can help companies cut emissions in the short term while working with businesses on long-term transformation, such as switching to low-carbon fuels and fleets. Our investment themes in the more transformative space include transportation and mobility, roughly 16 percent of global greenhouse gas emissions.

Driving change in infrastructure

Take two examples: Nordic Ferry Infrastructure, the leading private passenger and freight sea transportation company in the Nordic region, and First Student, the largest student transportation service provider in North America, providing over 900 million student journeys a year. In both cases, we acquired companies whose operations relied on diesel-powered vessels. Since then, we’ve focused on electrifying the fleets and exploring alternative fuel sources. By decarbonizing these operations, we aim to future-proof the companies, with the goal of generating returns for our investors by increasing their potential value to future owners, while supporting passenger and employee health, and reducing the companies’ environmental impact – and contributing to healthier, more sustainable communities.

But transformation goes beyond investing in electric buses and ferries. It requires collaborating with local governments in different jurisdictions to create the incentives and subsidies that help make these investments commercially viable today so that, over time, the economics of doing this at scale continue to improve. It’s also about looking at shifts in consumer behaviors and urban planning to make transportation more sustainable and making the core operations of these companies more efficient – from digitization strategies to AI route optimization.

GETEC, one of Germany’s market leaders in energy services, operates around 8,000 decentralized energy production plants, another great example of this. We helped the company transition from a very carbon-intensive business to a more sustainable energy solutions business. By investing in sales and operational excellence, digital capabilities, and sustainability initiatives, we contributed to more than doubling its revenue and assets, expanded its presence into nine countries, and tripled the share of revenues generated from renewable sources, saving more than 610,000 tons of CO2 annually for its customers. GETEC has demonstrated its sustainability leadership through a comprehensive net-zero roadmap to 2045.

That’s why we believe it’s important to both back and scale clean businesses while transforming carbon-intensive assets. The immediate impact of decarbonizing these assets achieves short-term wins, but it also lays the groundwork for long-term success.

The role of governance in transformation

Central to this transformation is our governance model. By taking majority ownership in our portfolio companies, we can influence the board make-up and, as a result, strategic direction. We can align governance structures with decarbonization goals, seeking to ensure that every decision supports a shift toward cleaner assets and operations. This often involves collaboration with policymakers, local governments, and regulators to support and incentivize change.

We apply this governance model to every investment we make, not just the hard-to-abate assets. EQT was an early adopter in our industry of Science-Based Targets, both for our own organization and our portfolio companies*. We want to help decarbonize every business we own because we recognize the tangible operational benefits and potential long-term value that sustainability brings to businesses. Decarbonization isn’t a one-off project; it’s integrated into our entire investment cycle. From the moment we close a deal, we typically start mobilizing on its decarbonization plans, underwriting sustainability upfront during the due diligence process, and ensuring that these targets are part of the investment decision itself.

One thing we’ve done well as an organization is systematize this approach, embedding decarbonization into every stage of the deal cycle and investment process. We look to actively decarbonize the companies in which we invest. Every company has a carbon footprint, no matter how small, and we’re working to bring that down, contributing to a more sustainable future.

*EQT funds’ portfolio companies within EQT Private Equity, EQT Future, EQT Infrastructure and BPEA VII-VIII, i.e. the investment strategies where EQT funds typically have control or co-control.


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