Blackstone details ambitious new green project

Written by: Jayson Derrick
September 29, 2020
  • Private equity giant Blackstone detailed a new green initiative.
  • All assets and companies Blackstone acquires will be subject to a 15% carbon reduction in three years.
  • Green investments can be costly but generate hundreds of millions of dollars worth of cost savings.

Private equity giant Blackstone Group Inc. (NYSE: BX) announced Tuesday an ambitious green project of lowering carbon emissions on all newly acquired assets, The Wall Street Journal reported.

The green plan

Blackstone pledged to lower carbon emissions of any asset or company it acquires by 15% within the first three years. The initiative will start next year and includes any asset where Blackstone has control of the energy systems.

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To help achieve its goals, Blackstone is teaming with the digital-automation company Schneider Electric to track its progress. The France-based company will keep records of usage, cost, and emissions data based on monthly energy bills.

Companies like Blackstone have faced increased pressure to focus more on the environment and other social and governance-related hot topics (known as ESG), according to WSJ. The pressure is coming in part from public pension funds and other investors who demand changes to old and outdated environmental practices.

Want to hear the opposing view against ESG investments? Read this article on why one pro says it is a “complete fraud.”

Blackstone is backed with $564 billion in assets under management so a company of its size should be counted on to implement real change and create a favorable impact on the environment.

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Plan starts from day one

Blackstone has the “experience, the team, the capabilities, and the technology” to achieve its goals, WSJ quoted Blackstone President Jonathan Gray as saying. The experience comes from knowing how to achieve its goals before a deal is closed.

Blackstone’s due diligence of an asset or business will include questions related to energy consumption. This will give Blackstone a better idea of where and how it can reduce emissions, be it through simply changing light fixtures, improving heating and cooling systems, or replacing windows to better capture hot or cold air.

“Some of the fixes are quick, but some also require culture changes,” said Alison Fenton-Willock, Blackstone’s global head of ESG. The firm is giving itself a three-year window because that’s “not something that happens overnight.”

Green investment generates tangible results

Blackstone’s investments to lower the carbon footprint doesn’t come at a cheap cost. But when done properly, it can generate a positive return on investments. For example, when Blackstone owned the hotel chain Hilton from 2008 to 2018, it was able to cut carbon emissions by 30%, waste by 32%, and energy and water usage by 22%.

The end result translated to more than $1 billion in lower energy costs over the 10-year period, according to WSJ.

Most recently, Blackstone has gained experience in solar panels on rooftops of the logistic warehouses it owns along with its residential development in Manhattan.