Private equity firms, including Blackstone and Carlyle, are under scrutiny for their substantial contributions to fossil fuel emissions, totaling 1.2 gigatons annually. This alarming figure was revealed in the latest Private Equity Climate Risks Scorecard, which highlights the disconnect between the firms' public commitments to sustainability and their actual investments in fossil fuels.
Key Takeaways
21 private equity firms are responsible for 1.2 gigatons of fossil fuel emissions each year.
EIG Global Energy Partners received an "F" grade for its high emissions.
Carlyle Group and Brookfield Asset Management are among firms criticized for their fossil fuel investments.
The report emphasizes a trend of greenwashing within the private equity sector.
The Report's Findings
The Private Equity Climate Risks Scorecard, produced by the Private Equity Stakeholder Project, Americans for Financial Reform Education Fund, and Global Energy Monitor, assessed the energy holdings of 21 private equity firms. The report revealed that these firms are profiting from investments in fossil fuel assets while claiming to support an energy transition.
Amanda Mendoza, a senior research coordinator for the Private Equity Stakeholder Project, stated, "The scorecard documents how private equity firms and their executives are making billions by investing public employees’ retirement money into planet-destroying fossil fuel assets."
Grades Assigned to Firms
The report assigned letter grades based on the firms' portfolio emissions from key fossil fuel assets, including:
Upstream fossil fuel extraction
Liquefied natural gas
Coal plants
Among the firms evaluated:
EIG Global Energy Partners: Received an "F" grade, with 23 fossil fuel companies in its portfolio, resulting in over 255 million metric tons of CO2 emissions annually.
Carlyle Group: Holds 77% of its energy portfolio in fossil fuel companies, contributing to 214 million metric tons of CO2 emissions.
Brookfield Asset Management: 50% of its energy portfolio is invested in fossil fuels, with the firm disputing the report's accuracy.
Industry Response
The findings have sparked significant backlash from environmental advocates, who accuse these firms of greenwashing. Oscar Valdes Viera, a research manager for Americans for Financial Reform Education Fund, noted, "We found a sharp contrast between what private equity firms are saying and their actions, painting a picture of an industry engaging in greenwashing."
Carlyle Group defended its position, stating, "Carlyle remains focused on investing in the energy transition, not divesting from it." Meanwhile, Blackstone announced plans to sell its stake in the General James M. Gavin Coal Plant, which has been criticized for its emissions.
Conclusion
The report serves as a wake-up call for private equity firms, urging them to align their investments with their public commitments to sustainability. As the climate crisis intensifies, the pressure is mounting for these firms to take meaningful action toward reducing their fossil fuel investments and transitioning to cleaner energy sources. The findings underscore the urgent need for transparency and accountability in the private equity sector as it navigates the complexities of climate change and sustainability.
Sources
Private equity firms Blackstone, Carlyle, others called out for 1.2 gigatons of fossil fuel emissions | Pensions & Investments, Pensions & Investments.