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Ara Partners Releases 2024 Industrial Decarbonization Report

Ara Partners has announced the publication of its highly anticipated 2024 Industrial Decarbonization Report, highlighting remarkable progress and demonstrating the strong connection between financial performance and emissions reduction within the industrial sector. This report is particularly significant as it comes at a time when industrials contribute notably to global CO2 emissions, yet attract less than ten percent of climate-focused investment.

Focus Areas

The framework of Ara’s strategy revolves around two central pillars: emissions reduction and waste management. These components are not only integrated but are also rigorously evaluated across all their investment ventures. The company primarily targets investments capable of achieving greenhouse gas (GHG) emissions reductions of 60% or more compared to traditional market solutions. In 2024 alone, Ara’s portfolio reportedly reduced emissions significantly, totaling approximately 1.7 million metric tonnes of CO2 equivalent, while also eliminating around 542,000 metric tonnes of waste. This is analogous to taking about 339,500 vehicles off the roads for a year and corresponding to the waste handled by 77,400 garbage trucks.

The Value of Decarbonization

Irina Markina, the Managing Director and Chief Decarbonization Officer at Ara Partners, articulated that the industrial sector, despite its significant role in global emissions, has oddly been overlooked in climate finance conversations. “We concentrate on the manufacturing, chemicals and materials, food and agriculture, and logistics sectors, where high emissions coexist with practical solutions and economic incentives for decarbonization,” she stated. Markina emphasized that a successful decarbonization initiative must intertwine with value creation and robust financial performance for sustainable business operations.

Ara's approach to investment is further exemplified by its backing of companies like Priority Power, an energy management service firm. Ara has successfully exited from this investment, demonstrating the viability of businesses concentrated on producing low-carbon solutions—an area of increasing demand.

Strategic Implementation

Throughout the investment phase, Ara established a gold-standard carbon operating model, which involved employing an Enterprise Resource Planning (ERP) system to track emissions precisely. The model allowed quantification of the firm’s carbon footprint and the potential for avoided emissions, while integrating comprehensive data across Scopes 1 to 3 into decision-making processes. Ara facilitated tools for its portfolio companies to realize measurable emissions reductions that benefit their customers.

“We have closely collaborated with management teams to synchronize decarbonization objectives with operational success, customer fulfillment, and long-term growth prospects,” shared Troy Thacker, Co-Founder and Managing Partner of Ara Partners. The success of this model is reflected in the energy management sector's significant growth, with revenue expanding sixfold and energy infrastructure revenue tripling since 2019.

Looking Forward

The recently published report acts as a testament to Ara Partners’ commitment to decarbonizing the industrial economy and advancing strategies with substantial environmental impacts. As of now, the firm manages approximately $6.2 billion in assets, which positions it uniquely to influence the trajectory toward enhanced sustainability within vital economic sectors. For those interested in delving deeper into the methodologies and insights presented in this report, it is available online at Ara Partners’ official website.

In conclusion, Ara Partners is not merely advocating for a shift towards sustainability but is proactively establishing a reproducible business model that integrates decarbonization into the fabric of corporate strategy. This is a pivotal model as the world moves towards a more sustainable future, with industries around the globe recognizing the urgency and necessity of tackling climate change.

For further insights, visit Ara Partners Website.