Already activeĬarlyle’s motivation behind the programme is two-fold.įirst, the programme should improve the credit profile and lower the risk of its portfolio. None is comprehensive enough to encompass all potential sectors, the firm said. They will not be based on a single methodology such as the Science-Based Targets initiative, however. Targets will be grounded in climate science. But in what Starr terms a “carrot approach” they will rewarded with lower pricing for achieving them. “We have to meet companies where they are.”Ĭompanies will not be penalised for missing the targets embedded in their loans. Targets will be set at “the intersection of ambition and feasibility”, Starr said. Its ESG team will work with companies to achieve the sustainability performance targets embedded in their loans. Its credit business is separate from its PE operation.Ĭarlyle will then pick and monitor appropriate KPIs with borrowers. ![]() To qualify, borrowers must usually submit an externally verified carbon footprint within six months of signing a loan with Carlyle, which manages US$143bn in credit, including direct lending. The private equity and debt giant's “decarbonisation financing programme” aims to incentivise a borrower group with often little grasp of its carbon footprint to invest “sweat equity” in calculating and then reducing emissions profiles, according to Megan Starr, global head of impact at Carlyle.Ĭarlyle has not disclosed the size of its programme, which it says “represents the latest step in ongoing efforts to drive progress in energy transition”. ![]() The Carlyle Group has launched one of the US private credit market’s first sustainability-linked loan programmes, offering middle-market credits a pricing benefit for committing to reduce their emissions or embed other climate-related performance indicators.
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