Private Equity Firms Continue Funding Dirty Energy
A recent investigation by nonprofits, LittleSis and the Private Equity Stakeholder Project, has found that some of the largest private equity firms in the US are responsible for financing and profiting from fossil fuel projects that heavily contribute to the country's greenhouse gas (GHG) emissions. The 12 private equity firms covered in The Private Equity Dirty Dozen report manage over $7 trillion in assets for ultra-wealthy investors away from public markets, making them exempt from most financial disclosure regulations. This means that most ordinary citizens with pensions or mutual funds have no idea if their money is being invested in dirty energy projects.
Research Director of LittleSis and co-author of the report Derek Seidman notes, "It's a serious problem when super-rich private equity executives who invest billions in harmful fossil fuels can greenwash their reputations through acquiring coveted board seats at prestigious universities and cultural institutions."
Al Jazeera: Should fossil fuel advertising be regulated?, October 20, 2021.
Why This Matters
This new report found that the largest private equity investors in oil, gas, and coal generally escape public scrutiny, despite being "some of the world's biggest oil and gas barons." So while they personally contribute to the climate crisis, this loophole for discretion allows them the opportunity to sit on the boards of influential organizations in policy, arts, and higher education, and bolster their reputations.
The Carlyle Group is among the world's largest private equity firms and owns dozens of oil and gas companies. The firm also has stakes in the notorious NGP Energy Capital and Hilcorp Energy -- both of which have track records as major GHG emitters.
The Lack Of Transparency
Many of the private equity firms highlighted in the "Dirty Dozen" report are pumping money into fossil fuel projects worldwide despite having announced commitments to invest in sustainable energy infrastructure and partner with renewable energy companies. The Carlyle Group has declared its intentions to invest in Amp Solar Group, "a Canadian-based global energy transition platform," while simultaneously investing in expanding oil production in Colombia and Ghana.
Another report released this week states that 25 of Europe's largest banks -- all of which have committed to net zero and are often thought of as climate change leaders -- have been "pouring US$406.5 billion into upstream oil & gas expanders since the Paris Agreement was signed (2016-2021)."
And from governments and businesses, there is also little proof of concrete action on net-zero promises. Many of them are predicted to fall short of their emission targets, which could doom the planet's goal to limit warming to 1.5 degrees Celsius. The lack of transparency from private equity firms, their high-net-worth investors, banks, governments, and major corporations only further diminishes the chances of limiting GHG emissions and reaching emissions targets.
Reuters: 2021 saw jump in greenhouse-gas emissions, says report, January 10, 2022.
Guardian: Why we need to keep fossil fuels in the ground | Keep it in the ground, March 16, 2015.