Why the World Needs Impact Investing | Summary and Q&A

TL;DR

Megan Starr, Head of Global Impact at Carlyle Group, discusses how climate change has affected their work and the increasing importance of ESG financing.

Key Insights

• 🪡 COVID-19 has increased the focus on climate change and the need for climate resilience in companies.
• 🥅 ESG financing offers incentives for companies to achieve environmental and social goals, resulting in debt reduction.
• 👻 The diversity in the definition of ESG allows for different approaches and promotes active management.
• ❓ The energy transition is a crucial area of impact investing, as rapid decarbonization occurs across different sectors.
• 👾 Dynamic materiality in the ESG space involves continuously monitoring emerging issues and adapting portfolios accordingly.
• #️⃣ Carlyle Group has been successful in integrating ESG into its investment strategies, achieving significant financing numbers.
• ❓ ESG financing provides a convergence of profitability and environmental/social progress.

Transcript

hi i'm leanna hawkins and this is the salt sideline report we are here at salt new york with megan starr she is the head of global impact at the carlisle group major woman in the impact world so happy to have you here thanks for having me so megan tell me how climate change is affecting the space that you work in with investors at the carlisle grou... Read More

Questions & Answers

Q: How has COVID-19 impacted the focus on climate change at the Carlyle Group?

COVID-19 actually accelerated the focus on climate change, as companies became more aware of the external risks and opportunities associated with the climate crisis. Management teams focused on agility and forward-thinking to ensure climate resilience.

Q: What is ESG financing and what trends are emerging in this area?

ESG financing involves linking debt prices to environmental and social goals. At Carlyle Group, they have seen significant financings exceeding $10 billion, such as linking debt discounts to carbon emissions reductions or achieving diversity goals.

Q: Why is there no standardized definition for ESG and why is this beneficial?

The lack of a single definition for ESG allows for diversity in approaches and quality, which is advantageous for active management. It enables the focus on material financial performance and encourages companies to excel in ESG across industries.

Q: Which areas of impact investing are Megan Starr's favorites?

Megan Starr's favorite areas of impact investing include the energy transition, where rapid decarbonization is occurring, and dynamic materiality in the ESG space, as new issues constantly emerge, requiring proactive positioning of portfolios.

Summary & Key Takeaways

• Megan Starr explains that despite the COVID-19 pandemic, the focus on climate change has only intensified, with companies now prioritizing climate resilience.

• ESG financing at Carlyle Group has exceeded $10 billion, allowing debt reduction for achieving environmental and social goals.

• The definition of ESG varies, but Starr believes the lack of a single definition is an opportunity for active management to focus on material financial performance.