The Environment Element

Horizon understands the risks global warming pose on the planet and its people and, as such, has taken a proactive approach since 2020 to measure and monitor the portfolio emissions – Scope 1, 2 and 3. Originally we focused primarily on Scope 1 and 2 emissions, with a lighter touch on Scope 3, but gradually we have been increasing the number of Scope 3 categories that we collect, all whilst ensuring high levels of data quality and transparency. Studies show Scope 3 emissions typically represent up to around 75% of a company’s total GHG emissions , and this percentage is likely to be significantly higher for technology companies.

Therefore, by measuring and reducing their scope 3 emissions, technology companies can leverage value, create competitive advantages, and mitigate environmental, market and regulatory risk.

Our carbon emission calculation, both at firm and asset level, is done in accordance with the accounting principles of the GHG Protocol. We continue to partner with our longstanding advisor, Carbon Responsible, who supports us on the carbon emission calculation front. Wherever possible we prioritise the use of primary data, however, estimates are used to bridge data gaps and ensure completeness of the calculations. Findings from our 2022 calculations can be find below.

https://cdn.cdp.net/cdp-production/cms/guidance_docs/pdfs/000/003/504/original/CDP-technical-note-scope-3-relevance-by-sector.pdf

The 15 companies in the Horizon Capital portfolio are of different sizes and operate in different sectors, and consequently their impact is extremely diverse, and their emissions are distributed very differently among the three emissions scopes. We observe in 2022 that overall scope 1 and 2 emissions have decreased by 4% and 15% respectively (10% overall). However, for transparency purposes it has to be said that this is not exclusively the result of emission reduction efforts.

Explaining the decrease in scope 1 and 2 emissions is not possible, due to a relatively low data quality and availability in these emissions areas. We believe data quality and disclosure has the potential to continue to improve across the portfolio, with a focus on expanded reporting in 2023, particularly in Scope 3, and use of more actual data, not proxy or estimates wherever possible. Scope 3 emissions have substantially increased since 2021 (+309%), attributable to the inclusion of new emissions categories (such as employee commuting and supply chain), the introduction of a new company in the portfolio (Dains) and of an improved data availability for most scope 3 categories (in particular, we have witnessed an increase in granularity of travel data for most companies, as a result of aligning the company’s expense systems to produce accurate information).

In conclusion, despite the analysis showing scope 3 emissions have increased across the portfolio we can with confidence say that this is not as a result of further emissions, in fact, we have multiple examples of implementing initiatives focused on emission reduction across the portfolio, for example Modern Network’s investment in solar panels and Agilico’s refurbishment of the low-utilisation printers.