Blackstone considers ESG a key part of evaluating new investment opportunities. Evaluation focuses on identifying both risks and potential value creation. Post-investment, it uses an annual ESG survey and quarterly data collection process to monitor portfolio companies. Participation in the survey and data collection is required for majority-owned companies.
Blackstone’s portfolio operations and ESG teams work across the portfolio to implement oversight structure and compliance systems. It actively engages with companies post-investment and continuously monitors their progress while training them on ESG integration.
Systems and technology are in place to track ESG data. For investments, Blackstone has made ESG data like any other financial metric. It leverages its existing financial data collection process to collect ESG data. Data related to headcount, diversity, wages, greenhouse gas emissions and community investment is collected. It also collects other, more qualitative data annually as part of its ESG surveys. This helps monitor whether companies are following best practices with respect to ESG policies and initiatives.
Last year, Blackstone asked portfolio companies to report quarterly to their boards on ESG. Blackstone believes it is a best practice to engage boards on ESG issues and that consistent reporting provides awareness and accountability.
“At Blackstone and across our portfolio, our aim is to be transparent and disclose the steps we are making towards value creation through our firm and portfolio-wide ESG efforts,” says Jean Rogers, global head of ESG. “Our advice is not to be afraid to admit there is more to do and explain how and why your firm is focusing on ESG efforts.” Rogers, founder of the Sustainability Accounting Standards Board, joined Blackstone in 2021 to lead its expanding global ESG efforts.
At the corporate level, it collects and tracks ESG metrics relevant to its business annually. Blackstone, which has been named a PE Innovator in ESG for a second year in a row, also tracks sustainability metrics including carbon emissions, recycling and water consumption.
In addition to its target to reduce carbon emissions by 15 percent across all new investments where it controls energy use, Blackstone has committed approximately $16 billion in investments it believes are consistent with the energy transition since 2019.
Blackstone, which has stakes in approximately 250 companies and 12,000 real estate assets, is also highly focused on driving diversity within the company and across its portfolio.
For our full 2022 Private Equity Innovators in ESG coverage, click here.