Brookfield Business Partners L.P. (BBU): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear, no-nonsense breakdown of the external forces shaping Brookfield Business Partners L.P. (BBU) right now. My two decades in this space tell me the near-term story is about geopolitical risk, a strong balance sheet enabling opportunistic M&A, and a crucial corporate simplification move. Here is the PESTLE analysis, grounded in 2025 fiscal year data.

Political Factors: Geopolitical Risk and Corporate Structure

The global operating environment is defintely a mixed bag for BBU. We see market uncertainty driven by global trade tensions, which can complicate supply chains and sales for a multinational like this. While shifts in US trade policy, like tariffs, pose a risk, BBU's diversified, regional sourcing strategy helps mitigate the worst impacts. It's a smart hedge.

The biggest political-structural move is the planned conversion to a single Canadian corporation, BBU Inc. This isn't just paperwork; it's a strategic play to broaden the investor base and increase demand from index funds that avoid complex partnership structures. Still, political instability in major operating markets, such as the Korean Peninsula, remains a material risk to their localized assets.

The conversion is a clear signal they want a bigger, simpler audience.

Economic Factors: Liquidity and Interest Rate Headwinds

BBU's financial position remains robust, giving them real optionality. Q3 2025 Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) stood at a solid $575 million, reflecting stable underlying performance across the portfolio. More importantly, corporate liquidity is massive, sitting at approximately $2.9 billion pro forma for announced transactions as of Q2 2025. This is dry powder.

Here's the quick math: they generated over $1.5 billion in Q1 2025 alone from capital recycling-selling mature assets to fund new growth and buybacks. But to be fair, high interest rates in some jurisdictions, like Brazil, continue to be a drag, impacting their economic free cash flow (EFO). That's a real cost of capital friction.

They have the capital; the cost of using it is just higher right now.

Sociological Factors: Mission Critical and Consumer Behavior

BBU's portfolio includes essential services that are inherently resilient, which is a significant sociological advantage. For example, their water and wastewater services operation in Brazil provides clean water for over 16 million people-a truly mission critical service. Plus, their focus extends to social development through initiatives like the BRK Institute.

On the labor side, the dealer software operation runs a 16-week Returnship Program, which is a great way to support career restarts and boost diversity metrics. Still, macroeconomic uncertainty is affecting consumer behavior globally, and that's leading to slower revenue recognition in some of their business services segments. People are just getting a little tighter with their spending.

Their essential services portfolio acts as a natural buffer against market jitters.

Technological Factors: The AI Productivity Push

The biggest near-term opportunity is BBU's strategic focus on Artificial Intelligence (AI) implementation. This isn't just buzz; they are driving significant operational improvements and productivity gains across their portfolio companies. The parent company is also actively seeking investment opportunities in the infrastructure that powers the AI revolution itself.

However, this transformation isn't free. Ongoing costs for technology upgrades are impacting the Business Services segment's Q3 2025 results. You have to spend money to save money later. Digital transformation is also key to modernizing systems in new acquisitions, like the First National Financial Corporation investment, ensuring they don't buy legacy tech debt.

AI is their clearest path to margin expansion.

Legal Factors: The K-1 Killer and Regulatory Hurdles

The corporate simplification to a single BBU Inc. is a major legal and tax win for US investors because it will eliminate complex partnership tax reporting (K-1s). This is a huge friction point removed. On the compliance front, slower revenue recognition in Business Services is partly due to the conservative application of IFRS 17 accounting standards (an international standard for insurance contracts), which requires more detailed reporting.

Also, every acquisition requires customary closing conditions and regulatory approvals, which can delay capital deployment and extend the time it takes to realize returns. Compliance with global anti-bribery and corruption laws is a prioritized factor in their acquisition due diligence, which slows down the deal process but cleans up the risk profile.

Removing the K-1 is a direct value-add for shareholders.

Environmental Factors: Net-Zero and Supply Chain Focus

BBU is formally committed to supporting Brookfield's goal of reaching net-zero GHG emissions by 2050 or sooner. This commitment is integrated into their investment thesis. For example, their advanced energy storage operation submitted a formal commitment to the Science-Based Target Initiative (SBTi), which provides a framework for reducing emissions.

Environmental, Social, and Governance (ESG) factors are formally integrated into the investment and due diligence process, meaning they won't just buy a polluting asset without a clear cleanup plan. The modular building leasing service operation also introduced a Responsible Sourcing Policy to improve supply chain sustainability. This is about managing future regulatory and reputational risk.

ESG is now a core part of their investment screening, not an afterthought.

Next Action: Investment Team: draft a memo by end of next week detailing the expected cost savings and productivity gains from the top three AI initiatives across the Business Services segment.

Brookfield Business Partners L.P. (BBU) - PESTLE Analysis: Political factors

You're operating a global private equity platform, so political stability and trade policy aren't just background noise; they directly impact the cash flow of your portfolio companies. For Brookfield Business Partners L.P. (BBU), the political landscape in 2025 is defined by two major themes: managing the near-term volatility of global trade and executing a strategic corporate structure change to defintely improve long-term investor appeal.

Global trade tensions create market uncertainty for BBU's global operations.

Global trade tensions continue to generate market uncertainty, a key risk for BBU's diversified, multinational operations. While BBU's Q1 2025 letter to unitholders noted that changing trade policy contributes to an uncertain global macroeconomic outlook, the portfolio's resilience has been evident. For instance, Adjusted EBITDA for the second quarter of 2025 was $591 million, up from $524 million in the prior period, showing the strength of its market-leading positions despite the noise. Still, a prolonged downturn in global growth, driven by political friction, remains a material headwind.

The core political risk here is the unpredictable nature of international relations, which can quickly alter the economics of a business. It's a constant, low-grade fever for any global operator.

US trade policy shifts, like tariffs, pose a risk, but regional sourcing mitigates the impact.

Shifts in US trade policy, particularly the threat of new tariffs, pose a direct financial risk to BBU's Industrials segment. The company has explicitly cited the risk of the US President imposing a 25% tariff on steel and aluminum imports, and the possibility of a 25% across the board tariff on key trading partners like Canada and Mexico. These actions can be inflationary, increasing input costs and creating market volatility.

To be fair, BBU is not just waiting for the next political shoe to drop. Management anticipates manageable impacts due to its operational strategy of regional sourcing and manufacturing. This means BBU's portfolio companies are structured to reduce dependency on long, high-risk supply chains, effectively creating a political hedge. Also, changes to US domestic policy, such as a loss of tax benefits under the Inflation Reduction Act of 2022 (IRA), are a separate, material risk that could impact the profitability of certain energy-related operations.

Planned conversion to a single Canadian corporation (BBU Inc.) aims to broaden the investor base and increase index demand.

A major political-structural move is the ongoing simplification announced in September 2025: the conversion of the limited partnership (BBU) structure into a single Canadian corporation, Brookfield Business Corporation (BBUC). This is a strategic political action to overcome the administrative burden associated with the partnership structure.

The primary benefit is investor-facing: the BBUC shares issue a Form 1099 in the US and a Form T5 in Canada, which are significantly more palatable to a broader investor base, including institutional funds and retail investors, than the complex Schedule K-1 and T5013 forms issued by BBU. This structural change has already paid dividends in terms of political-economic visibility and index inclusion:

• BBUC is already included in the Russell 2000 Index.
• BBUC is included in the MSCI Small Cap (Canadian) Index.
• The structure is designed to be eligible for other index inclusions, which drives passive capital demand.

Political instability in major operating markets, like the Korean Peninsula, remains a material risk.

BBU's global footprint means it is inherently exposed to political instability in its major operating regions. The Korean Peninsula, a region where Brookfield (the parent/affiliate) has significant exposure with US$12 billion of assets under management, is a prime example. The political turmoil in South Korea in early 2025, including a martial law declaration and subsequent impeachment process, creates a challenging operating environment.

The political crisis has had a measurable impact on the market, with South Korea's central bank reducing its 2025 economic growth forecast to a narrow range of 1.6-1.7%. BBU's exposure includes logistics assets, like the Brookfield Cheongna Logistics Center, which was recently valued in a potential deal at approximately 1 trillion won (about $720 million). Any escalation of tensions with North Korea, or prolonged domestic political gridlock, could severely impact the valuation and operational stability of these material assets.

Here's the quick math on the political risk exposure in a key market:

Next Step: Portfolio Management: Review all Industrials segment supply chain contracts for regional sourcing flexibility and quantify the cost increase for a hypothetical 25% tariff scenario by month-end.

Brookfield Business Partners L.P. (BBU) - PESTLE Analysis: Economic factors

You're looking at Brookfield Business Partners L.P. (BBU) and trying to map the economic terrain, which is defintely the right move. The global economy in 2025 is a mixed bag-inflation is sticky, interest rates are high, but certain essential services and industrial operations are holding up. For a private equity-style operator like BBU, that translates to a focus on capital allocation and operational resilience. The numbers tell a clear story about their financial strength and the headwinds they are managing.

Q3 2025 Adjusted EBITDA was $575 million, reflecting a stable underlying performance compared to the prior period.

The headline number for Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (Adjusted EBITDA) in the third quarter of 2025 was $575 million. Now, that figure was down from $844 million in the prior period, but you need to look closer. That difference is largely due to lower tax recoveries-only $77 million this quarter versus $296 million last year-and the impact of partial sales of business interests.

The core business is performing better than the headline suggests. Excluding those one-off items and the contribution from acquired or disposed operations, the underlying Adjusted EBITDA for Q3 2025 was actually $512 million, a slight increase from $501 million in the prior period. This shows that the operational improvements at the portfolio level are working, even as they trim the portfolio. Resilience is key in this market.

Corporate liquidity is robust at approximately $2.9 billion pro forma for announced transactions as of Q2 2025.

Liquidity is your safety net and your dry powder in a volatile economic climate. As of the second quarter of 2025, BBU's corporate liquidity stood at approximately $2.9 billion on a pro forma basis, which accounts for recently announced and closed transactions. This is a strong position. It means they have the capital flexibility to navigate any near-term economic shocks, fund their operating plans, and-crucially-pounce on attractive acquisition opportunities that inevitably arise when the market is stressed. The actual liquidity at the end of Q2 2025 was $2.3 billion, but the pro forma figure is what matters for future decision-making, as it includes expected cash from deals.

Capital recycling generated over $1.5 billion in Q1 2025, providing funds for reinvestment and buybacks.

BBU is a master of capital recycling-selling mature or optimized assets to fund new growth. In the first quarter of 2025 alone, their capital recycling initiatives generated over $1.5 billion. This strategy is a core economic driver, proving they can consistently realize value for their unitholders. By the third quarter of 2025, the total capital recycling program had generated over $2 billion, allowing them to pay down $1 billion in debt and fund new investments.

Here's the quick math on how that capital is being deployed:

• Debt Reduction: Used to pay down corporate borrowings, strengthening the balance sheet.
• Share Buybacks: Invested approximately $140 million to repurchase 5.9 million units and shares in Q1 2025 at an average price of about $24 per unit/share.
• New Investments: Committed approximately $370 million to acquire two leading industrial businesses in Q1 2025.

High interest rates in some jurisdictions, like Brazil, continue to impact economic free cash flow (EFO).

The biggest economic headwind is the high-interest-rate environment, especially in emerging markets where BBU has significant operations. Brazil is a prime example. The country's benchmark interest rate, the Selic, was raised to 14.75% by May 2025 and was expected to hit 15% by year-end. This high cost of capital directly increases the interest expense for BBU's local operations, which eats into their Economic Free Cash Flow (EFO).

For context, the Adjusted EFO for Q3 2025 was $284 million, a significant drop from $582 million in the prior period. While this decline is complex and includes the impact of dispositions, the persistently high interest rates in key markets are a structural drag on cash flow. It slows down local investment and makes financing new projects more expensive, which is a key risk to monitor for BBU's long-term value creation in those regions.

Brookfield Business Partners L.P. (BBU) - PESTLE Analysis: Social factors

You're looking for the social underpinnings of Brookfield Business Partners L.P.'s (BBU) performance, and honestly, this is where the firm's long-term value proposition gets interesting. Their portfolio is heavily weighted toward essential services, which creates a strong social license to operate (SLO) and a predictable revenue stream. But, like any global holding company, they are defintely not immune to shifts in consumer behavior driven by macroeconomic uncertainty.

Portfolio includes 'mission critical' essential services, such as clean water for over 16 million people in Brazil.

A core element of Brookfield Business Partners L.P.'s strategy is acquiring and operating businesses that provide essential, or 'mission critical,' services. This focus inherently ties their financial performance to positive social outcomes. The most concrete example is their water and wastewater services operation, BRK Ambiental, in Brazil. This business provides critical water and sanitation services through exclusive, multi-decade contracts.

This isn't just a utility; it's a massive social infrastructure project. BRK Ambiental serves more than 16 million people across over 100 municipalities in Brazil. To put that in perspective, that's a population roughly the size of New York City and Chicago combined. The stability of a business that provides clean water and sanitation is a powerful counterbalance to cyclical economic swings.

Focus on social development through the BRK Institute, founded by the water and wastewater services operation.

To deepen its social commitment and manage its social license, the water and wastewater services operation founded the BRK Institute in 2023. This is a non-profit organization dedicated to fostering socioeconomic development in the communities it serves. The institute's focus extends beyond infrastructure to address the human capital side of development.

The initiatives are designed to create a positive feedback loop: better sanitation leads to better public health, which supports stronger local economies. It's a smart way to ensure community support for long-term, multi-decade concession agreements.

Dealer software operation runs a 16-week Returnship Program to support career restarts and diversity.

In the Business Services segment, the dealer software and technology services operation (CDK Global) is actively addressing social factors related to workforce diversity and inclusion. They developed a 16-week Returnship Program designed to support professionals looking to restart their careers after a pause.

This initiative helps tap into a highly skilled but often overlooked talent pool, primarily women and veterans. The program is a success on a retention front, with the most recent cohort showing a retention rate of over 90%, which is a clear, measurable win for diversity and talent acquisition. It's a great example of how a social program can directly improve a business's operational metrics by securing high-quality, diverse talent. One clean program, high retention.

Macroeconomic uncertainty is affecting consumer behavior, leading to slower revenue recognition in some business services.

While the essential nature of many assets provides a buffer, the broader economic climate is still a factor. The Business Services segment, which includes operations like the residential mortgage insurer, has felt the pinch of macroeconomic uncertainty, particularly in Canada.

Specifically, the segment's Q3 2025 Adjusted EBITDA was $188 million, down from $228 million in the prior year's comparable period. Part of this decline reflects the timing impact of slower revenue recognition (IFR17 accounting) at the residential mortgage insurer due to more conservative model assumptions, which are a direct response to the uncertain Canadian economic outlook. Here's the quick math: the Business Services segment saw a drop of $40 million in Adjusted EBITDA year-over-year in Q3 2025. What this estimate hides is that the underlying demand for first-time home buyers remains resilient, but the cautious social and economic environment forces a more conservative financial view. This is a clear signal that even in essential financial services, consumer confidence and regulatory caution, which are social factors, can slow down financial reporting.

The key takeaway is that while the industrials and infrastructure services operations are largely insulated, the Business Services segment remains exposed to shifts in consumer behavior and regulatory caution in the face of economic uncertainty.

Brookfield Business Partners L.P. (BBU) - PESTLE Analysis: Technological factors

Strategic focus on Artificial Intelligence (AI) implementation is driving significant operational improvements and productivity gains

You can defintely see Brookfield Business Partners L.P. embedding Artificial Intelligence (AI) and machine learning (ML) directly into the operational DNA of its portfolio companies. This isn't just buzzword compliance; it's a core value creation lever. Management views AI as a tool to accelerate value creation plans, and the results are showing up in segment performance.

In the Industrial segment, for instance, a recent acquisition-the electric heat tracing systems manufacturer-is undergoing a significant upgrade. The plan involves using AI and ML to enhance equipment, improve measurement and sensing, and optimize the process flow in the primary production facility. This is expected to increase throughput and reduce labor costs. Also, the Infrastructure Services segment's Lottery Service operation saw tangible benefits in Q3 2025, with improved margin performance driven by productivity gains and a favorable mix of services. It's simple: we use technology to make the core businesses run better and cheaper.

Here is a quick look at how operational gains are translating into segment performance, excluding tax benefits and contribution from acquired/disposed operations:

Ongoing costs for technology upgrades are impacting the Business Services segment's Q3 2025 results

To be fair, this technology push isn't free. Our Business Services segment, which includes the dealer software and technology services operation, reported Adjusted EBITDA of $188 million for the three months ended September 30, 2025. This result explicitly reflects the impact of ongoing costs related to technology upgrades at that dealer software business. This is a classic trade-off: you invest capital today for a more defensible, profitable business tomorrow.

We saw this trend start earlier in the year, too. The Q1 2025 results for the same segment were partially offset by higher costs associated with these technology upgrades. While the exact dollar impact is embedded, the strategic decision is clear: maintain stable bookings through continued renewal activity and commercial initiatives, but accept the near-term margin pressure from necessary modernization investments. This is a multi-quarter investment cycle, not a one-time expense.

Parent company is actively seeking investment opportunities in infrastructure that powers the AI revolution

The biggest technological opportunity for the Brookfield ecosystem sits at the parent company level, Brookfield Asset Management, and it directly impacts the capital pool available for Brookfield Business Partners L.P. The parent is treating AI compute capacity as core infrastructure, much like utilities or telecom networks.

They are launching a massive global AI Infrastructure program, which is anchored by the Brookfield Artificial Intelligence Infrastructure Fund (BAIIF). The fund targets $10 billion in equity commitments and aims to acquire up to $100 billion in total AI infrastructure assets, deploying capital across the entire value chain-from energy and land to data centers and compute. This is a huge, decisive bet on the future. They have already secured $5 billion in capital commitments from select partners, including Nvidia and the Kuwait Investment Authority.

The fund's focus areas show how Brookfield is positioning itself to capture the AI boom:

• Building AI Factories, which are training-focused data centers.
• Developing dedicated behind-the-meter power solutions, including a $5 billion framework agreement with Bloom Energy for 1 GW of power.
• Investing in compute infrastructure tailored for governments and global enterprises.

Digital transformation is key to modernizing systems in new acquisitions, like the First National Financial Corporation investment

When Brookfield Business Partners L.P. acquires a business, the value creation thesis almost always includes a digital transformation component. The investment in First National Financial Corporation, a Canadian mortgage lender, is a perfect example of this. The acquisition, valued at approximately $2.9 billion in total equity, is expected to close in the fourth quarter of 2025 and is explicitly aimed at driving innovation.

The strategic plan is to leverage the operational expertise of the acquiring partners to streamline processes and enhance profitability. My quick math on BBU's share of the equity investment is about $145 million, so this is a meaningful piece of the puzzle. This means applying modern data analytics to optimize underwriting and servicing operations in a capital-efficient business model. The goal is to take a market leader with a scalable platform and modernize its core systems to support expansion into new areas, like alternative lending and cross-border U.S. market opportunities. It's all about making a good business a great, digitally-enabled one.

Finance: draft 13-week cash view incorporating Q4 2025 technology upgrade projections by Friday.

Brookfield Business Partners L.P. (BBU) - PESTLE Analysis: Legal factors

Corporate Simplification to BBU Inc. and US Tax Reporting

You've been dealing with the complexity of a Limited Partnership (LP) structure, and honestly, the Schedule K-1 tax forms for US investors are a headache. The biggest near-term legal change for Brookfield Business Partners is the planned corporate simplification, converting the partnership (BBU) and the corporation (BBUC) into a single Canadian corporation, BBU Inc.. This move, announced in September 2025, is defintely a win for investors.

The core legal benefit is the elimination of the partnership tax reporting forms, the notorious K-1s, for US investors who will instead receive the simpler Form 1099, which is standard for corporate stock. The entire reorganization is expected to be completed in the first quarter of 2026, subject to shareholder, court, and customary regulatory approvals. It's a clean-up that broadens the investor base and should increase index demand, which is always a good thing for liquidity.

Here's the quick math on the pre-simplification structure's market value, based on the September 2025 announcement:

Acquisitions Require Customary Regulatory Approvals

For a capital deployment machine like Brookfield Business Partners, the legal timeline for acquisitions is a constant factor that can delay capital being put to work. Every major transaction requires customary closing conditions, including anti-trust and foreign investment regulatory approvals, which can take months and keep capital tied up in escrow.

For example, in 2025, the firm completed or announced significant deals that highlight this legal hurdle:

• Acquisition of Antylia Scientific: A $1.3 billion deal completed in May 2025, which closed after satisfying customary closing conditions and regulatory approvals.
• Privatization of First National Financial Corporation: A $2.7 billion partnership announced in July 2025, which is expected to close later in the year, explicitly subject to required shareholder, court, and regulatory approvals.

You have to factor in the time lag. This is why the firm always maintains significant corporate liquidity-over $2.3 billion at the end of Q1 2025, pro forma for expected dispositions and announced acquisitions-to ensure they can deploy capital once the legal green light is given.

Accounting Standards and Revenue Recognition

The legal and regulatory framework dictates how you report your financial performance, and this has a direct impact on investor perception. Specifically, the Business Services segment, which includes the residential mortgage insurer Sagen MI Canada Inc., is affected by the conservative accounting required by IFRS 17 (International Financial Reporting Standard 17).

IFRS 17 is the new global standard for insurance contracts, and it fundamentally changes revenue recognition from a premium-based approach to a service-based approach.

• The Contractual Service Margin (CSM): This key IFRS 17 concept represents the unearned profit from an insurance contract.
• Conservative Recognition: The CSM is recognized as revenue over the life of the contract as the insurance service is provided, which is a much slower, more conservative pace than the old method of recognizing premiums upfront.

This conservative application means the segment's reported revenue is smoothed out over a long period, even if the underlying business is performing well. For context, the Business Services segment generated Adjusted EBITDA of $213 million in Q1 2025 and $205 million in Q2 2025. The accounting standard ensures a more transparent view of long-term profitability, but it can make near-term revenue growth look slower on the income statement.

Compliance with Global Anti-Bribery and Corruption Laws

Operating a global portfolio of businesses across multiple jurisdictions means compliance with anti-bribery and corruption (ABC) laws is a non-negotiable legal priority. The firm maintains a zero-tolerance policy, which is a critical factor in acquisition due diligence.

The legal compliance framework is built on several key pillars:

• Due Diligence: Rigorous ABC due diligence is conducted on all new acquisitions and third-party partners (agents, joint ventures) to establish their anti-bribery credentials.
• Training: All employees are required to complete anti-bribery and corruption training on an annual basis.
• Global Scope: The policies cover all jurisdictions where the firm operates, and the more stringent local law always applies if it conflicts with the firm's policy.

This robust legal framework mitigates the risk of massive fines and reputational damage from violations of laws like the US Foreign Corrupt Practices Act (FCPA) or the UK Bribery Act, which is essential for a company with a market capitalization of approximately $2.89 billion as of November 2025.

Brookfield Business Partners L.P. (BBU) - PESTLE Analysis: Environmental factors

The environmental factors for Brookfield Business Partners L.P. (BBU) are dominated by a clear, top-down mandate for decarbonization and a deep integration of climate risk into the investment lifecycle. You should view BBU's environmental strategy not just as compliance, but as a core value-creation lever, especially given the capital-intensive nature of its industrial and business services portfolio.

Commitment to supporting Brookfield's goal of reaching net-zero GHG emissions by 2050 or sooner.

Brookfield Business Partners is aligned with the broader Brookfield goal of achieving net-zero greenhouse gas (GHG) emissions by 2050 or sooner across its Operationally Managed investments. This is a significant commitment that drives operational changes across the portfolio. To track this, BBU has expanded its data collection, reporting on GHG emissions across approximately 80% of its Invested Assets Under Management (AUM) as of December 31, 2024.

The firm provides portfolio companies with a 'Net Zero Playbook' and an 'Achieving Net Zero Framework' to help them identify and execute decarbonization strategies. This isn't just a policy; it's a tangible operating plan. For example, the construction operation, Multiplex, is pushing for an aggressive near-term goal of zero onsite emissions by 2025 as part of its 'One Decade to Act' strategy.

Advanced energy storage operation submitted a formal commitment to the Science-Based Target Initiative (SBTi).

The advanced energy storage operation, Clarios, has submitted a commitment letter to the Science-Based Target Initiative (SBTi) to establish Scope 1 and Scope 2 GHG targets, signaling a move toward science-backed decarbonization. This is defintely a necessary step for a global leader in low-voltage battery technologies, where circularity is key to its environmental impact.

While Clarios is in the process of target validation, another key operation already has its targets submitted. The modular building leasing service operation, Modulaire, has submitted its near-term and net-zero targets to SBTi for validation, aligning with a stringent 1.5°C pathway.

Here's the quick math on Modulaire's progress:

Environmental, Social, and Governance (ESG) factors are formally integrated into the investment and due diligence process.

ESG factors are not an afterthought; they are embedded throughout the entire investment process, from initial screening to eventual monetization. This institutionalizes climate and social risk management. The due diligence phase proactively identifies material ESG risks and opportunities, leveraging industry-specific guidelines that incorporate the Sustainability Accounting Standards Board (SASB) framework.

For every acquisition where BBU has economic control, the investment team creates a tailored integration plan that specifically addresses material ESG-related matters. What this estimate hides is the potential for ESG-driven value creation, such as identifying energy efficiency projects or transitioning to lower-carbon inputs. Furthermore, BBU ensures each new investment develops a Paris-aligned business plan, which incorporates impact targets and provides a long-term view of the resources needed to achieve them.

• Identify material ESG risks proactively.
• Use SASB guidance for sector-specific assessments.
• Develop a Paris-aligned business plan for each acquisition.

The modular building leasing service operation introduced a Responsible Sourcing Policy to improve supply chain sustainability.

The modular building leasing service operation, Modulaire, introduced an Environmental, Social, Governance and Sustainability (ESGS) Responsible Sourcing Policy (RSP) in 2023. This policy is crucial because the construction and leasing sector has a significant Scope 3 (supply chain) emissions footprint, so focusing on sourcing is a clear action.

The RSP is designed to embed ESGS principles at all stages of the supply chain, moving beyond simple compliance to active collaboration with vendors. This is a smart move because it pushes the environmental burden-sharing upstream, which is where the most significant decarbonization opportunities often lie. Modulaire also maintains a formal Vendor Code of Conduct and Vendor Management Guidelines to enforce these new standards.