Global private capital investment firm The Carlyle Group announced a series of sustainable investment goals, including a commitment to achieve net zero greenhouse gas (GHG) emissions across its investments by 2050.
In addition to its long-term net zero goal, Carlyle also introduced interim targets for its majority-owned corporate private equity, power and energy portfolio companies, including requiring all new majority-owned portfolio companies to set Paris-aligned climate goals within two years of ownership, beginning in 2025. Additionally, the firm set a goal to have 75% of its portfolio companies’ Scope 1 and 2 emissions covered by Paris-aligned climate goals by 2025.
According to Carlyle, the new commitments position the firm as one of the first major private equity players to establish short-term and long-term net zero climate goals. The company stressed that its approach is focused on driving real emissions reductions in its portfolio companies, rather than relying primarily on portfolio allocation decisions.
Meg Starr, Carlyle’s Global Head of Impact, said:
“The energy transition isn’t solely about selecting companies that are climate leaders today – we need to actively create the climate leaders of tomorrow as well. As a partner to over 260 portfolio companies worldwide, it is our responsibility to empower companies across industries to embark on a successful journey to net zero with robust, Paris-aligned climate goals and the tools to achieve them. While the path to creating a less carbon-intensive world is ever evolving, we are committed to supporting our companies and encouraging private equity industry stakeholders to work together to drive meaningful change.”
Carlyle highlighted several of the practices and initiatives already underway in support of its new commitments, including performing bottom-up carbon footprinting of Scope 1 and 2 emissions for its majority-owned portfolio companies in the recent vintages of its flagship buyout funds, and supporting companies in their efforts to gather emissions data. In October, Carlyle, along with CalPERS, co-led a $4 trillion investor group to launch the ESG Data Convergence Project, an initiative aimed to streamline the private equity industry’s approach to collecting and reporting ESG data.
Carlyle has also pursued several energy transition-focused transactions, committing more than $1.2 billion to renewable and sustainable energy companies over the past two years.
Kewsong Lee, Carlyle’s Chief Executive Officer, said:
“Collectively, it is imperative that the private equity industry focus on investing, rather than divesting, in order to enact real progress on the energy transition. In announcing our commitment to net zero, we hold ourselves accountable to drive real emissions reductions within our portfolio companies. Investors need to be at the vanguard of helping companies decarbonize across all sectors of the economy. Not only does this strategy have a higher carbon reduction potential, but it is also key to making companies more competitive in a decarbonizing world – leading to better performance and better results for our investors.”