Carlyle Group
At a Glance
Industry
Financial Services and Insurance
Project Types
Clean and Renewable Energy, Sustainability and Energy Management Strategy
Year
2015
Location
Washington, DC
Summary
Lingyu (Lynn) Xia assisted Carlyle Group portfolio companies with CDP reporting, vetting vendors and compiling training materials.
Goals
In the summer of 2015, when The Carlyle Group enlisted the help of EDF Climate Corps fellow Lingyu (Lynn) Xia, environmental, social and corporate governance (ESG) issues were rapidly gaining traction within the private equity industry. Investors were beginning to request and factor in ESG issues as a component of their investment evaluation while companies in The Carlyle Group’s investment portfolio were being asked by customers to address and report on ESG issues. Furthermore, The Carlyle Group and its portfolio companies were both recognizing energy efficiency as another way to add value in the investment process. This entire context supported The Carlyle Group’s decision to ask Xia to work with its Chief Sustainability Officer, Jackie Roberts, to advance several portfolio-wide ESG projects. Her three primary projects included developing a methodology for Carbon Disclosure Project (CDP) reporting, vetting LED and solar electric vendors and compiling green buildings training materials.
Solutions
Portfolio companies are frequently short staffed and often have limited experience with carbon emissions reporting, but they are increasingly requested by customers to report to CDP. In the summer of 2015, Xia assisted one Carlyle portfolio company through the CDP reporting process and then used the experience as an opportunity to compile resources and tools and recommend a centralized and streamlined process for future first-time responders in Carlyle’s portfolio. Similarly, portfolio companies encounter challenges in quickly researching and identifying suitable vendors for energy efficiency projects. To overcome this, Xia worked with Carlyle’s procurement team through a formal request for proposal (RFP) process to identify preferred LED lighting and solar PV vendors that portfolio companies can trust and turn to. The vendors were selected based on their products and services as well as their ability to serve the breadth of Carlyle portfolio companies. LED lighting and solar categories were chosen based on expressed interests from portfolio companies as well as alignment in timing with widespread tax credits and incentives. Finally, energy efficiency projects have always been challenging to incorporate within Carlyle’s real estate investments given the relatively short ownership period Carlyle has on its real assets. Nonetheless, the US real estate team recognizes the importance of green buildings and incorporating energy efficient features within its properties. Xia compiled a set of training materials and resources on green buildings to inform the real estate team of potential opportunities in the space.
Potential Impact
The Carlyle Group’s purpose is “to invest wisely and add value.” Energy efficiency and sustainability present new avenues of value creation for Carlyle’s investments. Several interested portfolio companies have already connected with the identified preferred vendors to begin exploring energy efficiency projects in LED lighting and solar PV. Carlyle’s facilitation of energy efficiency projects and carbon emissions reporting at portfolio companies lowers operating costs and helps to position portfolio companies as sustainability leaders within their industries.