How ESG is shaping the economy of tomorrow

How has the rise of ESG altered the invest­ment land­scape?

Envi­ron­men­tal sus­tain­abil­i­ty is an increas­ing­ly impor­tant part of how organ­i­sa­tions deliv­er val­ue to their cus­tomers and share­hold­ers. We believe com­pa­nies that con­sid­er it will ulti­mate­ly be more resilient and there­fore have a com­pet­i­tive edge. The invest­ment land­scape looks total­ly dif­fer­ent than it did in pre­vi­ous decades. More cap­i­tal has been flow­ing into the ESG space, par­tic­u­lar­ly into ener­gy tran­si­tion. To reach net zero by 2050, experts esti­mate that it will take $3.5tn in invest­ments – every year. Investors can and want to play their part.

How are you help­ing to dri­ve envi­ron­men­tal sus­tain­abil­i­ty at Black­stone?

Since it first began oper­at­ing in Europe 25 years ago, Black­stone has invest­ed over $100bn to back the com­pa­nies and indus­tries pow­er­ing the future.

Across our busi­ness­es, we see an oppor­tu­ni­ty to invest an esti­mat­ed $100bn in ener­gy tran­si­tion and cli­mate change solu­tions over the next decade, build­ing on the approx­i­mate­ly $16bn we’ve com­mit­ted to invest­ments we believe are con­sis­tent with the broad­er ener­gy tran­si­tion since 2019. Sev­er­al of our plat­forms enable this invest­ment, includ­ing funds with­in Black­stone Ener­gy Part­ners, which focus on cli­mate solu­tions and ener­gy tran­si­tion in pri­vate equi­ty. We do this in two ways: by invest­ing in envi­ron­men­tal ser­vices com­pa­nies and by help­ing com­pa­nies imple­ment envi­ron­men­tal improve­ments. DESOTEC is an envi­ron­men­tal ser­vices com­pa­ny that helps indus­tri­al com­pa­nies clean the air, water and soil around their sites through its fleet of 2,700 mobile fil­ters. Last year, this fleet con­tributed to the reduc­tion of 110,000 tonnes of CO₂-equiv­a­lent emis­sions

We have also invest­ed in the NEC Group, a lead­ing live events busi­ness, whose Birm­ing­ham cam­pus will deliv­er one of the largest elec­tric vehi­cle (EV) charg­ing hubs in Europe, capa­ble of charg­ing 32 EVs at a time in just 15 to 30 min­utes.

How can investors work with com­pa­nies with­in their port­fo­lio to make them more sus­tain­able?

Some investors lever­age exist­ing green­house gas foot­prints to inform their invest­ment deci­sions, choos­ing to divest from the high­est-emit­ting com­pa­nies and assets. Oth­ers have set their sights on 2050 and com­mit­ted to a net-zero port­fo­lio over the course of the next sev­er­al decades. Both approach­es, how­ev­er, dis­re­gard the need for urgent, deep decar­boniza­tion dur­ing the time of own­er­ship. We believe this can help put com­pa­nies on a tra­jec­to­ry to make their port­fo­lio more sus­tain­able for the long-term and achieve their goals.
We focus on what we call the car­bon delta, or the car­bon emis­sions that we can abate dur­ing our hold­ing peri­od.

At Black­stone, we have quan­ti­fied our work on Green­house Gas (GHG) Delta by set­ting a numer­ic tar­get focused on action­able improve­ment over the short term. We have com­mit­ted to a goal of reduc­ing car­bon emis­sions by 15% in aggre­gate for all new invest­ments where we con­trol the ener­gy use over the first three years of own­er­ship – a com­mit­ment that is informed by cli­mate sci­ence and focus­es on near-term, urgent reduc­tions.

To mea­sure progress reduc­ing GHG emis­sions, it is impor­tant for investors to have a robust, mea­sured GHG foot­print of their hold­ings. We are invest­ing sig­nif­i­cant resources in get­ting this right at Black­stone. Our port­fo­lio includes approx­i­mate­ly 12,000 real estate assets and over 250 port­fo­lio com­pa­nies. A rig­or­ous car­bon account­ing pro­gram is cen­tral to under­stand­ing our portfolio’s GHG foot­print. Our pro­gram will allow us to mea­sure progress while also pro­vid­ing our investors with the data they need to mea­sure progress against their cli­mate com­mit­ments.

What is the future of sus­tain­abil­i­ty in busi­ness and invest­ing?

Mean­ing­ful, mea­sur­able inter­ven­tions that are mate­r­i­al to a company’s core busi­ness mod­el – not just an add-on or nice-to-have – are need­ed to posi­tion a port­fo­lio for the changes of the com­ing decades and deliv­er last­ing val­ue to investors. We believe that to make a com­pa­ny more sus­tain­able is to make it more resilient and thus com­pet­i­tive. We’re excit­ed about the tra­jec­to­ry Black­stone is on and con­fi­dent that we have the pro­grams and peo­ple today that will help the com­pa­nies in our port­fo­lio build for tomor­row.

For more infor­ma­tion, vis­it blackstone.com/investuk

Pro­mot­ed by Black­stone