The Carlyle Group has committed to achieve net-zero greenhouse gas emissions by 2050 or sooner across all its investments, one of the first major global private equity firms to set short and long-term climate goals on its portfolios.
The US-based firm has set two near-term targets for its majority-owned corporate private equity, power and energy portfolio companies that include aligning 75% of their direct Scope 1 and 2 emissions with the Paris Agreement on climate change by 2025.
The Paris Agreement aims to limit global warming to well below 2 degrees Celsius compared to pre-industrial levels.
After 2025, Carlyle is aiming to have all new majority-owned portfolio companies set climate goals aligned with the agreement within two years of ownership. The firm currently partners with more than 260 portfolio companies globally.
Carlyle has helped to spearhead broad efforts to improve data disclosure in private equity. It was among the firms that in September created the ESG Data Convergence Project, which aims to streamline the private equity industry’s historically fragmented approach to collecting and reporting ESG data.
Last month, the project announced a commitment of more than 100 general and limited partners, representing US$8.7trn of assets under management.
Carlyle has also demonstrated progress on encouraging its portfolio companies to track Scope 1 and 2 carbon emissions. The firm's new targets do not refer to indirect Scope 3 emissions, however, which typically account for the bulk of financial institutions' financed emissions.
“The firm has completed its second year of 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,” Carlyle said.
The proportion of majority-owned portfolio companies in its most recently invested US buyout fund that track carbon footprints has increased from 22% to 100% in two years, it said.