Steve Hatfield and his team oversee sustainability integration across a vast portfolio of investments including corporate private equity, infrastructure, renewable energy and real estate. Despite the wide variety of sectors and geographies represented, an increasingly ubiquitous theme has been decarbonization to mitigate risk and drive value creation.
“2024 is the year of decarbonization. We are experiencing a paradigm shift because of significant new regulations, increasing customer expectations, and mounting peer pressure,” said Hatfield, while giving an opening speech to his portfolio companies at the annual portfolio company sustainability conference in Washington, D.C.
Over the past two years, Hatfield’s team has focused on driving progress on Carlyle’s climate goals, including a near-term target for 75% of Carlyle’s In-Scope Companies’ Scopes 1 and 2 emissions to be covered by Paris-Aligned Climate Goals by 2025. As of Dec. 31, 22 companies met the goal and Hatfield feels confident the goal will be achieved as a result of several systematic initiatives his team has led to engage management teams at portfolio companies.
For example, at the beginning of 2024, Hatfield and his team designed and launched a decarbonization bootcamp, a 6-month course that seeks to equip portfolio companies with the knowledge, tools and resources they might need on their path to decarbonize. Forty-one companies are currently participating in the inaugural cohort. The courses are designed to provide immediately actionable guidance. In the “Take Action” course in April, companies were introduced to a variety of service providers offering key carbon reduction technologies such as solar PV, battery storage, commercial geothermal, EV and green leases.
These efforts already demonstrated significant results. For example, one of Carlyle’s portfolio companies, StandardAero, partnered with Hatfield’s team to implement a comprehensive decarbonization strategy aligned to the ESG-related requirements of its customers. This resulted in significant realized cost savings in 2023 from energy and waste reduction initiatives that led to measurable emissions reductions.
Why Watch
Hatfield’s team has several upcoming portfolio level initiatives it’s excited to launch, including a Scope 3 supplier engagement playbook that can help companies develop strategies to reduce supplier-related emissions. With Scope 3 representing the majority of emissions for many companies, reducing supplier emissions is critical to meeting targets.
At the enterprise level, Hatfield’s team will continue to onboard the Watershed carbon accounting technology platform, which is being used to calculate and track Scope 1, 2, and 3 emissions from across Carlyle’s portfolio. This information is necessary to meet several upcoming regulatory disclosure requirements, as well as measure progress towards Carlyle’s 2050 Net Zero goal.
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