Mergers & Acquisitions names the 2021 PE Innovators in ESG, including, Carlyle.
While many commitments to environmental, social and governance goals are still rhetorical, Carlyle Group’s contributions stand out in their maturity. How do you measure portfolio company carbon emissions and reduction across funds, so that limited partners can make apples-to-apples comparisons? Carlyle does not simply propose its own answer; the firm is leading an effort to create an industry standard, partnering with other general partners, such as Blackstone Group, and limited partners, such as the California Public Employees’ Retirement System and the Canada Pension Plan Investment Board. Boston Consulting Group was tapped to aggregate the data.
“We need to start a common language across all these participants so we can actually, in a sustained way, make some progress,” Carlyle CEO Kewsong Lee told Bloomberg News. “By honing in on a set of common standards and common metrics, we start to standardize the conversations so we can really track progress. It’s really hard to do that right now.”
Six metrics are being collected across portfolios managing $4 trillion worth of assets to give current and future owners insight into the absolute and relative environmental progress of their companies. Greenhouse gas emissions and renewable energy use are among the criteria Boston Consulting Group will consider when averaging an industry benchmark.
The project’s scope is ambitious and represents perhaps the largest effort to date to move from conceptual frameworks endorsing ESG to aggregate data to inform investment decisions. Carlyle’s $293 billion in assets under management give it an ideal perch to lead by example; choosing to partner with other funds makes that leadership proactive.