StepStone Group – William Schmidt – 2025

Summary

Will Schmidt completed a comprehensive review of the market for net zero investment frameworks, applicable to private markets. Based on his findings, he developed a draft framework for StepStone, which the firm would be able to utilize for multi-asset class client portfolios where net zero alignment may be required.

Goals

Private markets are an exciting and expanding area of investment management; however, compared to public equity, there are both unique challenges and opportunities for integrating responsible investment and transitioning the real economy towards net zero alignment, given data availability constraints and a lack of specific frameworks and methodologies. StepStone, with its strong commitment to responsible investment, hoped to understand, based on existing frameworks, what data and actions would be required of a private markets portfolio invested across a range of asset classes (private equity, infrastructure, real estate, and private debt) for it to be managed in line with a net zero pathway for client portfolios. StepStone’s Responsible Investment team, led by Suzanne Tavill, enlisted an EDF Climate Corps Fellow, Will Schmidt, to tackle this challenge.

Solutions

With little background specifically around net zero investment frameworks, Will recognized it would be important to ‘shop around’ and understand the existing solutions out there. StepStone might require its own customized solution, but it was also possible the firm could use an existing framework as a blueprint. Conducting this review, IIGCC’s Net Zero Investment Framework (NZIF) emerged as one framework with a high degree of applicability that StepStone could consider adopting, albeit with some necessary modifications and supplemental frameworks. Will dove into building an alignment matrix for StepStone, incorporating the NZIF ‘core action points’ and assessing what StepStone would have to do to adhere to these criteria, outlining the data gaps and supplemental guidance documents, which would be required.

Potential Impact

The framework will still require further development and testing; however, the groundwork is laid for StepStone to implement this framework if clients or prospects require the firm to construct portfolios in line with a net-zero pathway. StepStone is focused on customized solutions for its clients, and this work provides a foundation from which the firm can offer net-zero-aligned solutions.