Morgan Stanley has formed a new growth-capital strategy that aims to invest $1bn to back companies that will seek to cut a total of one gigaton worth of carbon-dioxide emissions by 2050 — and the bank is tying the strategy’s performance fees to that goal.

The 1GT private-equity strategy plans to back growth investments in 20 to 25 companies in areas that include mobility, power, sustainable food and agriculture, as well as the circular economy, said Vikram Raju, head of climate investing at Morgan Stanley Investment Management, the unit launching the strategy. He cited recyclers, energy-efficiency software companies and makers of low-carbon fertilisers as examples of businesses the firm would look to back. The new strategy’s fund has already lined up some capital from outside investors.