The Carlyle Group, a leading private equity firm that touts itself as a climate leader, has been found to have almost doubled its average annual greenhouse gas emissions from fossil fuel investments over the past decade, according to new research from the Private Equity Climate Risks project. The findings reveal that the company’s fossil fuel investments emitted an estimated 277 million metric tons of carbon dioxide equivalent (CO2e) from 2011 to 2021.
This greenhouse gas footprint is staggering, akin to the “carbon bomb” expected from Alaska’s Willow Arctic drilling project. It would take approximately 4.6 billion new trees per decade to remove this amount of CO2 from the atmosphere. Despite these facts, the Carlyle Group claims to be working to decarbonize conventional energy firms, with its investments in renewables now outpacing fossil fuels.
The report also found that the Carlyle Group’s investment portfolio contributes significantly to the global climate crisis and disproportionately impacts low-income and Black and brown communities. This has prompted calls for lawmakers to close regulatory loopholes and demand greater transparency from private equity firms.
Private equity financing, an opaque industry managing around $11 trillion globally, has minimal public scrutiny or regulatory oversight. This makes it difficult to verify portfolio companies and assets, as well as track risks. The Carlyle Group, a pioneer in the private equity space with $373 billion of assets under management, started investing in renewables in 2019 and pledged to achieve net-zero emissions by 2050 for some of its portfolios.
However, at the end of 2022, fossil fuels still made up 94 percent of Carlyle’s energy portfolio, with operations spanning across Texas, Massachusetts, Romania, and Switzerland. For every dollar invested in renewable energy sources like solar and wind, Carlyle invests $16 in fossil fuel operations, according to the report.
While the private equity industry provides a convenient haven for fossil fuel investments, it’s time for companies like the Carlyle Group to be held accountable for their impact on the environment and the communities they serve. True climate leadership means prioritizing long-term sustainability over short-term profits.