The Carlyle Group Issues Inaugural Corporate Citizenship Report

The Carlyle Group Issues Inaugural Corporate Citizenship Report

After a year that saw a strategic partnership launched with the Environmental Defense Fund and development of a business review process called the EcoValuScreen, The Carlyle Group has issued its first corporate citizenship report. 

"For 24 years, Carlyle has worked to be a good, ethical investor, and recently we have intensified our efforts to be an even better corporate citizen," Managing Directors William E. Conway Jr., Daniel A. D'Aniello and David M. Rubenstein said in the founders' letter that opens the report (pdf) released today in Washington, D.C.

"While we are making progress, we acknowledge that much work remains. Change takes time, focus, resources and the collective will of many people and organizations. Carlyle is committed to being a part of the solution."

The 32-page report lays out the work done thus far by the firm, which has some $97.7 billion under management, to embed environmental, social and governance considerations into investment practices and daily operations.

The firm pointed to six accomplishments in what the report described as "the early stages of our corporate citizenship efforts." Topping the list was The Carlyle Group's participation in the development of the Private Equity Growth Capital Council's nine-point set of Guidelines for Responsible Investment. Carlyle, one of the world's larger private equity investment firms, is one of a dozen companies that make up the council. The council established the guidelines, which were informed by the U.N. Principles for Responsible Investment and the U.N. Global Compact, in 2010.

Other accomplishments listed in the report are:

  • The Carlyle Group's launching of a process to share the responsible investment guidelines with the firm's portfolio companies. Expanding that effort is one of two key objectives the company set for 2011. The other is developing performance metrics.
  • Forging relationships with the Environmental Defense Fund and Robert Toigo Foundation.
  • Launching the EcoValuScreen with EDF. The due diligence tool, developed with The Payne Firm environmental consultancy, is designed to help identify and evaluate opportunities for operational improvements that can boost environmental and financial performance at target companies.
  • Broadening global wealth sharing and volunteer initiatives.
  • Increasing transparency of The Carlyle Group's corporate citizenship activities.

The report detailed several applications of the responsible investment guidelines and the EcoValuScreen. For example:

  • As a result of applying the guidelines, China Fishery Group -- among the world's larger industrial fishing companies -- has committed to an independent third-party sustainability assessment of its operations in connection with an investment by Carlyle Asia Partners III. The report said China Fishery employs state-of-the-art technology to responsibly harvest, process and deliver fish products to processors and distributors -- and the Carlyle's investment in the firm in July 2010 was "the largest investment ever by an alternative asset management firm in the seafood/fishing sector."
  • Instances in which the EcoValuScreen was put work included Carlyle's acquisition of nutritional supplement manufacturer NBTY Inc. in October 2010. NBTY makes and sells more than 25,000 products and its brands include Nature's Bounty, Holland & Barrett, Vitamin World and Puritan's Pride. Using the analytic tool, EDF and Payne identified "energy, packaging and solid waste as the company's key environmental performance areas" as well as possible initiatives to improve business by upping eco-performance.

Interest in responsible, sustainable investment is on the upswing -- pushed by investors, as SocialFund.com's Robert Kropp wrote in a recent post, and leading investment firms like Carlyle and KKR that are striving to stay ahead of the curve with help from organizations like EDF, as Ian Bailey wrote in a post last spring.

Speaking of Carlyle's key drivers for producing the company's first corporate citizenship report, David Marchick, Carlyle's managing director and global head of external affairs, told GreenBiz.com: "We're putting more energy and resources into ESG issues because our investors really want to partner with a firm that not only produces high quality returns, but also does so in an ethical responsible manner. We undertook this report both to improve transparency and also capture in one place all of the ESG activities in which we are engaged."

In producing the report, Carlyle found that the desire for action on ESG issues exists not only among investors, but also within the firm.

"We learned that there are initiatives all around the firm that people have pursued on their own, particularly in the volunteer area, that weren't top down or pushed from a corporate level," said Marchick. "I'd say the second thing (that emerged) is that the reaction from our LPs has been uniformly positive, particularly among large pension funds in the United States and Europe. What we found is that our developing, implementing and now reporting on our ESG activities actually helps them (LPs) do their job because they have constituencies and reporting they have to do. Our LPs have been pushing these issues for some time, and Carlyle decided it wants to be a leader on these issues."

Carlyle plans to produce its corporate citizenship report annually. The first report is available at www.carlyle.com/citizenship.

Photo illustration elements -- Screen shot of "Value Creation" video and logo courtesy of The Carlyle Group.