Private Equity Funds, Sensing Profit in Tumult, Are Propping Up Oil – The New York Times
Ayako Yasuda, professor of finance at the Graduate School of Management at the University of California, Davis, said private equity was “very incentivized to maximize what its clients want.” If clients pushed funds to find profits in environmentally responsible investments, “I don’t think they’d have a problem doing that.”
Kate Holderness, a spokeswoman for Blackstone, said that virtually none of the firm’s capital over the past three years was in oil exploration or production. while nearly $11 billon was committed to clean energy projects. The company is aiming to reduce its emissions by 15 percent across all new investments where it controls energy use, she said.
Weak disclosure rules means it’s difficult to verify environmental claims across the private equity industry. Blackstone has come under criticism over deals like its acquisition of a project to build a new oil pipeline and export terminal in Louisiana that would emit more than 500,000 tons of greenhouse gases per year. Ms. Holderness said the pipeline would be fitted with real-time emissions detection and monitoring technology.
Groups like the Private Equity Stakeholder Project have called on the Securities and Exchange Commission to compel private equity firms to fully disclose details of their fossil fuel holdings. The American Investment Council, the trade group, has opposed such a move, saying current requirements were adequate, particularly since the private-equity industry serves relatively sophisticated investors — pension funds or others with immense amounts of money to invest, and the wherewithal to do their own research.
Sophie Shive, an associate professor of finance at the University of Notre Dame, said more stringent transparency rules would help good private equity firms differentiate themselves in a murky industry and win new investors. Right now, she said, “it’s just easier for bad actors to hide.”