Private Equity International
Climate warning
Climate warning
Tabitha Kimani
9 w
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Private equity firms ploughing billions into fossil fuels
Private equity firms are using US public sector workers’ retirement savings to fund fossil fuel projects pumping more than a billion tonnes of greenhouse gas emissions into the atmosphere every year, according to an analysis.
They have ploughed more than $1tn (£750bn) into the energy sector since 2010, often buying into old and new fossil fuel projects and, thanks to exemptions from many financial disclosures, operating them outside the public eye, the researchers say.
In many cases they are mortgaging workers’ futures by taking the money they have put away for old age and investing it in assets that risk serious damage to the climate, the report claims.
“Public sector workers’ money, through national, state, and retirement pensions, provides much of the capital for private equity firms’ energy investments, but there is limited disclosure to the pension fund managers that the deferred earnings of their beneficiaries have potential climate impacts,” it says.
Researchers at Americans for Financial Reform Education Fund, Global Energy Monitor and Private Equity Stakeholder Project assessed the holdings of 21 private equity firms, overseeing a combined $6tn in assets under management.
Together, the analysis found that the 21 firms were funding projects responsible for releasing more than 1.17bn tons of CO2 equivalent (tCO2e) a year.
The research, compiled from financial data services, company websites, press releases and news reports, was limited to three categories of investments – upstream, fossil gas terminals, and coal plants – and so does not represent firms’ entire emissions footprints from energy investments.
They compiled their findings into a scorecard, ranking each firm by its exposure to fossil fuel emissions producing investments, transparency and alignment with the target of limiting the temperature rise to 1.5C above preindustrial levels.
EIG ranked last, receiving an F grade. It had 23 fossil fuel companies in its portfolio, the majority in upstream operations, giving it the estimated upstream emissions of more than 255m metric tons of tCO2e a year – the most of all its peers.
The second highest overall emitter was the Carlyle Group, with an estimated 214m tCO2e annually in combined carbon-intensive asset emissions. Its 23 fossil fuel company holdings represented more than three-quarters of its energy portfolio. It received a D grade.
The report traces a trend of private equity firms swooping in as large oil and gas firms seek to shed older and dirtier assets and the bigger banks increasingly regard them as risky investments. Thanks to limited disclosure rules, regulatory loopholes and complex corporate structures, some of the dirtiest assets have come to be owned by relatively obscure investment outfits, the report says.
The analysis you're referencing highlights the significant role private equity firms play in funding fossil fuel projects using public sector workers' retirement savings. These firms, benefiting from less stringent financial disclosure requirements, have funneled over $1 trillion into energy investments since 2010, with a focus on fossil fuels. This practice not only exacerbates climate risks by supporting high-emission projects but also risks the future financial stability of workers whose retirement funds are tied to these ventures.
The report points out that much of the capital comes from public pensions, which often lack transparency about the environmental impacts of these investments. The analysis by Americans for Financial Reform Education Fund, Global Energy Monitor, and Private Equity Stakeholder Project focused on 21 firms, estimating that their fossil fuel investments contribute over 1.17 billion tons of CO2 equivalent emissions annually.
EIG, one of the firms analyzed, was the highest emitter, with 255 million metric tons of CO2 equivalent emissions yearly, earning it an "F" grade. Carlyle Group, another major player, was responsible for 214 million tons of emissions and received a "D" grade. This report underscores a troubling trend where private equity firms acquire environmentally harmful assets from larger energy companies, exploiting loopholes to operate with minimal public scrutiny
This practice raises ethical concerns about the alignment of workers' retirement savings with climate goals and the long-term financial and environmental consequences of such investments.
Private equity firms ploughing billions into fossil fuels, analysis reveals
US public sector workers’ retirement savings invested in projects that pump out a billion tonnes of emissions a year
https://www.theguardian.com/business/2024/oct/01/private-equity-firms-us-pensions-fossil-fuel-projects
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6 w
I still don't understand why people still want to drag us back as we move forward towards a better and cleaner future.
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7 w
This isn't right...we all should be moving in the right direction towards making the planet safer for us and not dragging us behind.
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8 w
It's deeply concerning to see private equity firms using public sector workers' retirement savings to fund fossil fuel projects that are intensifying climate change. This practice not only jeopardizes environmental goals but also risks workers' futures, as their pensions are tied to high-emission ventures.
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8 w
Hi, Tabitha Kimani. Thanks for posting a climate review on our platform. However, this review should not be directed to Private Equity International, but to a company or an organization that needs to be aware of this. The idea behind our climate reviews is to make companies and organizations aware that they could (and should) do better. If enough people agree to your review, we will contact the company and ask them to join the climate dialogue. Read more here: https://www.wedonthavetime.org/our-community#guide
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9 w
this is so wrong, we are moving forward to having clean environment yet these organizations are pulling us back
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8 w
@annett_michuki While the world is striving to transition to clean energy and mitigate the effects of climate change, these investments in fossil fuels by private equity firms feel like a massive step backward. It's frustrating to see financial interests take precedence over environmental responsibility.
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9 w
This is very concerning, especially in the current global climate crisis. It raises questions about their commitment to sustainable and responsible investing. There should be a greater focus on renewable energy and environmentally friendly investments.
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8 w
@walter_lungayi You're absolutely right. In the face of the global climate crisis, continuing to fund fossil fuel projects signals a disconnect between financial practices and the urgent need for climate action. It raises serious concerns about the priorities of these firms and their lack of commitment to sustainable investing.
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9 w
This is so wrong...We need to push back against these investments and demand more responsible and ethical practices that truly support a sustainable future for all.
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8 w
@princess_nel_268 Def!! t's vital to push back against these irresponsible investments and advocate for ethical, climate-conscious financial practices.
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9 w
Shame on private equity firms for using public pensions to fund fossil fuels. They’re profiting from climate destruction and risking workers' futures. Disgraceful.
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9 w
investing heavily in fossil fuels, despite the growing global momentum toward clean energy, raises significant concerns, their actions risk undermining the urgent transition to sustainable energy.