Global private capital investment firm The Carlyle Group announced today the signing of a $4.1 billion ESG-linked credit facility for its Americas corporate private equity funds, the largest-ever in the U.S., and the first to be tied exclusively to board diversity.
Carlyle CEO Kewsong Lee said:
“In today’s accelerating world, we are improving outcomes with an innovative financing vehicle for our corporate private equity funds that directly supports the firm’s ongoing commitment to increasing board diversity as part of our integrated approach to building better businesses. As one of the world’s leading global investment firms, we have a significant opportunity to drive both growth and impact in an aligned way as we create long-term value for our companies, investors, shareholders, and communities.”
Sustainability linked loans and securities are an emerging form of sustainable finance instruments, with attributes including interest payments tied to an issuer’s achievement of specific sustainability targets. For Carlyle’s new credit facility, the price of debt is directly tied to the firm’s previously set goal of having 30% diverse directors on the boards of its controlled companies within two years of ownership.
Carlyle stated that its research has shown that the average earnings growth of its portfolio companies with two or more diverse board members has been approximately 12% greater per year than companies that lack diversity, underscoring the correlation of board diversity with strong financial decisions and performance.
Kara Helander, Chief Diversity, Equity and Inclusion Officer at Carlyle, said:
“Carlyle has long held the belief that diverse perspectives lead to great investment decisions, and this facility marks a tremendous milestone in our strategy to find opportunities at the intersection of financial performance and impact. We’re excited about the opportunity ahead to incorporate this facility into our multi-faceted approach to drive better results across our spheres of influence.”