Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance
• Responsible Investing

Environmental Achievements

• Reduced costs by approximately $1.8 million per year and eliminated about 5,000 metric tons of greenhouse gas emissions and 440,000 pounds of waste annually at NBTY through EcoValuScreen.
• More than 60 companies across Carlyle's portfolios evaluated their operations according to the PEGCC guidelines (representing more than 90% of Carlyle's controlled, corporate buyout investments).
• Applied EcoValuScreen to five transactions.
• H.C. Starck developed a clean supply chain process, certified by Bureau Veritas, ensuring products do not use minerals sourced from conflict regions.
• Implemented Energy Star-compliant computers and virtualization of data centers to reduce energy consumption.
• Opened a new eco-friendly office in Rosslyn, Virginia.

Social Achievements

• Launched Charter Board Partners (CBP), a nonprofit organization that teams local professionals with charter schools.
• Numerous events with Junior Achievement and Habitat for Humanity.
• Launched a matching program in the UK for employee donations to eligible charities.
• Launched the Toigo Private Equity MBA Graduate Fellowship to attract minority MBA graduates.

Governance Achievements

• More than 90% of the boards of Carlyle's controlled, corporate buyout companies reviewed the PEGCC guidelines.
• Formed working partnerships with PGGM and APG, two Dutch pension fund asset managers, to improve ESG practices.
• Integrated discussions of ESG issues into key professional development sessions.

Climate Goals & Targets

Environmental Challenges

• Integrating sustainability considerations into investment decisions.
• Developing appropriate metrics to measure progress on initiatives.
• Addressing social issues, particularly in Sub-Saharan Africa.
• Expanding efforts to share responsible investment guidelines with portfolio companies.

Mitigation Strategies

• Developed EcoValuScreen with EDF to evaluate target companies and identify ways to enhance environmental operations.
• Established a new investment team to target opportunities in Africa, focusing on social issues.
• Worked with experts like EDF, APG, and PGGM to share ideas and best practices on ESG integration.
• Integrated ESG discussions into professional development programs.

Supply Chain Management

Responsible Procurement

• H.C. Starck's conflict-free sourcing process.

Climate-Related Risks & Opportunities

Opportunities

• Energy efficiency improvements in portfolio companies.

Reporting Standards

Frameworks Used: PEGCC Guidelines for Responsible Investment, UN Principles for Responsible Investment, UN Global Compact, Walker Guidelines (UK), BVK Guidelines (Germany)

Certifications: ISO 14001 (implied by some portfolio company actions), Energy Star

Sustainable Products & Innovation

• Veyance Technologies' Eagle NRG belt.
• Talaris NMD 100 bill-dispensing unit.

Awards & Recognition

• Foreign Policy Association’s 2010 Corporate Social Responsibility Award

Environmental Metrics

ESG Focus Areas

• Responsible Investing
• Environmental Stewardship
• Corporate Governance
• Community Volunteering
• Workplace Diversity

Environmental Achievements

• Reduced greenhouse gas emissions by over 31,000 metric tons across more than a dozen portfolio companies, resulting in over $7 million in savings.
• Reduced water usage by 15 million gallons at Allison Transmission.
• Achieved a 10% increase in recycling at Allison Transmission.
• Aurora Place achieved 30% energy savings through improvements.

Social Achievements

• Carlyle matched over $190,000 in employee charitable contributions.
• Hosted the first Sustainability Roundtable for portfolio companies.
• Launched Global Volunteer Month with 12 events in six locations.
• Contributed $185,525 to the American Red Cross after Hurricane Sandy.
• Highest proportion of female executives (13%) among alternative asset management firms.

Governance Achievements

• Developed responsible investment guidelines, influencing the Private Equity Growth Capital Council (PEGCC) guidelines.
• Shared responsible investment guidelines with over 70 portfolio companies (90% of controlled companies).
• Integrated ESG considerations into investment decision-making process.

Climate Goals & Targets

Environmental Challenges

• Assessing and mitigating ESG risks associated with corporate investments.
• Potential negative effects of low-probability, high-impact ESG risks.

Mitigation Strategies

• Developed responsible investment guidelines.
• Integrated PEGCC guidelines into investment decision-making.
• Shared guidelines with portfolio companies for annual review.
• Used EcoValuScreen to identify environmental management opportunities.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: UN Principles for Responsible Investment, UN Global Compact

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• PQ Corporation's zeolites for catalytic converters

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Value creation
• Robust governance and transparency
• Industry leadership on ESG issues

Environmental Achievements

• Carlyle, across its 31 global offices and 1,600 employees, became carbon neutral in 2017.
• 15.9% reduction in data center energy use.
• New London office certified "Excellent" by BREEAM.
• U.S. offices earned LEED and Energy Star certifications.

Social Achievements

• Received a perfect score of 100 from the Human Rights Campaign for LGBTQ inclusiveness.
• Global mentoring program engaged over 500 participants.
• Numerous employee resource groups hosted nearly 120 events.

Governance Achievements

• 96% of Carlyle-controlled companies reviewed operations in accordance with Guidelines for Responsible Investment.
• Carlyle Europe Partners implemented enhanced ESG framework with company-by-company ESG KPI reporting.

Climate Goals & Targets

Environmental Challenges

• Identifying and managing ESG risks across a diverse portfolio of companies.
• Quantifying the impact of ESG initiatives.
• Ensuring consistent ESG practices across global operations.

Mitigation Strategies

• Tailored ESG strategies for each portfolio company.
• Use of SASB sector guidelines to identify material ESG issues.
• Regular training for employees on ESG issues.
• Engagement of external experts for ESG assessments.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Reporting Standards

Frameworks Used: SASB, UN Principles for Responsible Investment, UN Global Compact, Global Reporting Initiative

Certifications: LEED, Energy Star, BREEAM, ISO 14001

UN Sustainable Development Goals

• Goal 8 (Decent Work and Economic Growth)
• Goal 9 (Industry, Innovation and Infrastructure)

Investments in companies that create jobs and improve infrastructure.

Environmental Metrics

ESG Focus Areas

• Diverse and inclusive teams
• Engaged employees
• Sustainable growth
• Climate resilience
• Stronger communities

Environmental Achievements

• Carlyle became the first major private equity firm to go carbon neutral in 2018.
• In 2019, Carlyle cut greenhouse gas emissions by nearly 3%, water withdrawal by 2.5%, and diverted 83% of non-hazardous waste from landfill across its global facilities operations.
• Accolade Wines achieved a 44% reduction in CO2e emissions from its Bristol facility in the 12 months to March 2020.
• Neptune Energy's carbon intensity is one of the lowest in the industry (5.8kg of CO2 per boe in 2019).

Social Achievements

• Launched a Global Mentoring Program with over 800 participants.
• Conducted first firm-wide employee engagement survey.
• Established Employee Resource Groups (ERGs).
• Partnered with Year Up, providing internships and employment opportunities.
• Co-sponsored the Private Equity Veterans Initiative Summit.
• Improved diversity metrics (44% female employees, 50% female hires in 2019).

Governance Achievements

• Increased transparency and detail of corporate ESG disclosures through GRI and SASB disclosures.
• Established an internal carbon price for risk assessments and investment decisions.
• Implemented an ESG-linked term loan for Jeanologia, linking pricing to water savings targets.

Climate Goals & Targets

Environmental Challenges

• Addressing climate change and its impact on businesses.
• Improving diversity and inclusion across the organization and portfolio companies.
• Collecting and utilizing ESG data effectively.
• Balancing company-specific ESG work with broad-based portfolio-wide action.

Mitigation Strategies

• Investing in renewable energy projects (Cardinal Renewables).
• Partnering with portfolio companies to drive measurable change on material ESG issues.
• Setting ambitious goals for systemically important issues (e.g., board diversity).
• Developing new approaches to driving impact (e.g., ESG-linked financing).

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Appointment of Chief Procurement Officer to drive accountability.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Investing in renewable energy.

Reporting Standards

Frameworks Used: GRI, SASB

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• 2019 SuperReturn Award for Achievement in Promoting Diversity
• Perfect score in the Human Rights Campaign Corporate Equality Index

Environmental Metrics

ESG Focus Areas

• Sustainable growth
• Climate resilience
• Strong stakeholder ties
• Engaged employees
• Diverse and inclusive teams

Environmental Achievements

• Achieved fourth year of carbon neutrality across corporate activities
• Completed bottom-up carbon footprinting for majority-owned companies in US, Europe, and Asia Buyout strategies
• 284,521 MTCO2e of CO2e avoided from the grid through renewable energy investments
• Novolex announced a goal of reducing its GHG emissions intensity by 20% by 2025 (12% already achieved)

Social Achievements

• Published 100% score for the fourth year in a row on the HRC Corporate Equality Index
• Partnered with 100+ organizations to address the impact of COVID-19 on vulnerable communities
• More than 80% of employees participated in unconscious bias training
• 63% of new hires in the U.S. were women or ethnic minorities; 58% of new hires in Europe and 52% in Asia were women
• Expanded board diversity goal to 30% of all directors in Corporate Private Equity-controlled portfolio companies by 2023
• PPD realized more than $13 million in plan savings (15% decrease in projected costs) through healthcare benefits redesign
• Pharmapacks enhanced capabilities through improved organizational design and additional talent

Governance Achievements

• Published first Taskforce on Climate-related Financial Disclosures (TCFD) report
• Became a founding member of the One Planet Private Equity Funds Initiative
• Secured $6.5 billion in ESG-linked financings, including the largest ESG-linked U.S. private equity line of credit ($4.1 billion) tied to 30% diverse directors on boards within two years of ownership
• Revised and refreshed firmwide ESG Policy and Investment Exclusions and Parameters policy

Climate Goals & Targets

Environmental Challenges

• Credit investments present unique challenges for ESG integration due to higher deal volume, shorter diligence windows, less access to management and data, and fewer high-quality ESG tools.
• Dynamic materiality in ESG requires constant adaptation to evolving issues.
• COVID-19 pandemic presented challenges in various aspects of business operations and stakeholder engagement.

Mitigation Strategies

• Developed a proprietary ESG materiality analysis tool for Global Credit platform using SASB standards and country-level ESG risk data sets.
• Strengthened firm’s governance on sustainability with regular updates to the Carlyle Board of Directors.
• Expanded dedicated ESG and Impact team globally.
• Partnered with portfolio companies to navigate disruptions and implement agile strategies.
• Provided resources and support to portfolio companies to address challenges related to COVID-19 and cybersecurity.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Application of principles, values, standards, and norms of behavior as summarized in our Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Sea level rise
• Extreme weather events

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Renewable energy investments
• Energy efficiency improvements

Reporting Standards

Frameworks Used: GRI, SASB, TCFD, World Economic Forum's ESG metrics

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Energy Transition
• Diversity, Equity, and Inclusion (DEI)
• Climate Change

Environmental Achievements

• 289 MW of renewable energy capacity installed
• Investments saved the equivalent of 39 million gallons of gas annually
• 75% of portfolio companies’ Scopes 1 and 2 emissions to be covered by Paris-aligned climate goals by 2025
• All new majority-owned portfolio companies to set Paris-aligned climate goals within two years of ownership (post 2025)
• Net zero greenhouse gas emissions by 2050 across direct investments

Social Achievements

• Launched Carlyle DEI Leadership Network, a coalition of several portfolio companies’ CEOs
• Inaugural underwriter of The Milken Institute’s DEI in Asset Management Program
• 50+ portfolio company board seats filled with diverse executives since 2016
• 70% of Hexaware employees in APAC regions were recruited locally
• Hexaware spent over $1.5 million to support communities

Governance Achievements

• First major private equity firm to publish a Task Force on Climate-related Financial Disclosures (TCFD) report (2020)
• Led the ESG Data Convergence Project with CalPERS (2021), with over 190 GPs and LPs participating
• Developed a systematic approach to crafting purpose-built ESG strategies for portfolio companies
• Developed a DEI Playbook for portfolio companies
• Implemented a board committee responsible for sustainability at Cepsa, including DEI efforts

Climate Goals & Targets

Environmental Challenges

• Challenges associated with converging on comparable, performance-based, meaningful, and quantitative ESG data
• Rising energy costs
• Increased customer sensitivity towards climate-friendly products
• Need for a roadmap to build an integrated energy and carbon management strategy
• Capital constraints and lack of capabilities to deploy comprehensive energy solutions

Mitigation Strategies

• ESG Data Convergence Project to standardize ESG metrics
• Energy-to-Carbon Management Playbook to help improve existing energy and carbon management programs
• Partnership with portfolio companies to develop ESG initiatives and strategies
• EaaS delivery model to help meet the growing demand for sustainable energy systems
• Partnership with Cepsa to develop a business strategy to reduce emissions and increase diversity

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Supplier Code of Conduct
• Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Investing in opportunities created by the energy transition

Reporting Standards

Frameworks Used: GRI Standards, World Economic Forum’s ESG metrics, SASB Asset Management & Custody Activities Standards, TCFD

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity, Equity, and Inclusion (DEI)
• Governance

Environmental Achievements

• 833MW renewable energy capacity installed as of December 31, 2022
• 22 portfolio companies have set Paris-Aligned Climate Goals
• Operational carbon neutrality achieved for the 6th consecutive year

Social Achievements

• 27% increase in DEI award nominations in 2022
• 340+ portfolio company board seats filled with diverse directors as of March 31, 2023
• Launched DEI Leadership Network for portfolio company CEOs

Governance Achievements

• Established firmwide climate goals, including Net Zero by 2050
• Developed seven ESG playbooks for portfolio companies
• Over $25 billion in cumulative ESG-linked financings secured

Climate Goals & Targets

Environmental Challenges

• Obtaining comprehensive data to accurately measure emissions
• Competing for budget and resources among corporate priorities
• Locating economically viable low-carbon reduction technologies

Mitigation Strategies

• Providing guidance and support to portfolio companies
• Activating third-party vendors for support
• Assisting in structuring decarbonization-linked financings

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Chronic shifts in climate patterns

Transition Risks

• Policy and legal risks
• Technology risks
• Market risks
• Reputation risks

Opportunities

• Investment in renewable and sustainable energy

Reporting Standards

Frameworks Used: GRI, TCFD, WEF

Environmental Metrics

ESG Focus Areas

• Climate Change

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD