The energy assets owned by 21 private equity firms, including industry majors Blackstone Inc and Carlyle Group, contribute a huge 1.2 gigatons of fossil fuel emissions annually, according to a report by Pension & Investments Online.
The report cites the latest Private Equity Climate Risks Scorecard, jointly compiled by the Private Equity Stakeholder Project, the Americans for Financial Reform Education Fund, and the research group Global Energy Monitor, as highlighting the environmental impact of these firms’ investments and calls out private equity giants like Blackstone and Carlyle Group for their significant contributions to climate change.
“The scorecard exposes how private equity firms and their executives are profiting by channeling public employees’ retirement funds into investments that are driving the climate crisis,” said Amanda Mendoza, senior research and campaign coordinator at the Private Equity Stakeholders Project and co-author of the report.
The report evaluates private equity firms based on the emissions of their portfolio companies involved in fossil fuel extraction, liquefied natural gas (LNG), and coal production, as well as their progress towards adopting sustainable energy practices. It assigns letter grades to each firm, revealing a stark gap between their stated commitments to climate action and their actual investment activities.
“We found a sharp contrast between what private equity firms claim and their actions,” said Oscar Valdes Viera, research manager at Americans for Financial Reform Education Fund and another co-author of the report. “The data paints a picture of an industry heavily engaged in greenwashing while continuing to play a massive role in driving the climate crisis.”
EIG Global Energy Partners received the lowest grade, an “F,” due to its investments in 23 fossil fuel companies predominantly engaged in upstream refining and production operations. This portfolio is responsible for over 255 million metric tons of carbon dioxide emissions each year, according to the report. EIG did not respond to requests for comment.
Several other firms received “D” grades, including: Quantum Capital Group: 93% of its energy portfolio is tied to fossil fuels.
Carlyle defended its position, emphasising its commitment to the energy transition. “As one of the first global alternative asset managers to set a net-zero target in 2022, we are focused on reducing emissions across our portfolio rather than simply shifting high-carbon assets to others,” a spokesperson stated. The report estimates that Carlyle’s fossil fuel holdings emit a combined 214 million metric tons of carbon dioxide annually.
Brookfield, on the other hand, criticised the report’s findings, saying it contained “significant factual inaccuracies, incomplete information, and a flawed methodology.”
The report highlights the General James M Gavin Coal Plant in Ohio, which has been co-owned by Blackstone Capital Partners VII and ArcLight since 2017, as the ninth-highest emitting power plant in the US in 2022.
Blackstone, which recently signed an agreement to sell its stake in the Gavin plant, defended its investment. “Under our ownership, emission controls have improved significantly, placing Gavin in the lowest decile for CO2 emissions on a per megawatt-hour basis for large plants of its kind,” a spokesperson said, while also stating that the report includes “a considerable number of ‘fossil fuel assets’ where we do not have an investment – creating significant errors in their figures.”
Quantum Capital Group and several other firms mentioned in the report could not be immediately reached for comment.
