Blackstone Sets Goal to Reduce Carbon Emissions
September 29 2020 - 7:29AM
Dow Jones News
By Miriam Gottfried
Blackstone Group Inc., one of the world's largest owners of real
estate, is making a new commitment to cut its carbon footprint.
The investment firm has set a goal of reducing carbon emissions
by 15% within the first three years of buying any asset or company
across its portfolio. The initiative will begin in 2021 and will
apply to new investments where Blackstone controls the energy
systems.
The firm is joining with French energy and digital-automation
company Schneider Electric SE to track its progress. Schneider will
tabulate usage, cost and associated emissions data based on monthly
energy bills from each new piece of Blackstone's portfolio.
Emissions reductions will be reported in aggregate against the
firm's overall target.
Private-equity firms have become increasingly focused on
environmental, social and governance-related issues, driven in part
by pressure from the public pension funds and other institutions
that invest in them. Like many of its competitors, Blackstone has
been monitoring energy consumption and implementing strategies at
various properties and portfolio companies for years, but it is the
first among its peers to publicly set an overall target.
With $564 billion in assets under management across areas
including private equity, real estate and infrastructure, the firm
believes it has the ability to make a significant impact on the
environment by formally establishing a portfoliowide benchmark.
"We said: Now that we have the experience, the team, the
capabilities and the technology, why don't we set a real goal?"
said Blackstone President Jonathan Gray. "We're numbers-oriented
people, so by putting a target on it, we give the companies
something they're really going to go after."
Under the new initiative, Blackstone will ask a standardized set
of questions related to energy consumption when it is evaluating
prospective deals. Companies that require hands-on support,
including regular site visits by Blackstone's operations team or
the hiring of additional staff members to manage energy usage, will
be classified as "high-touch." These companies may consume a lot of
energy or have complex machinery and could present the greatest
opportunity for emissions reduction.
For example, power-transmission-belt manufacturer Gates Corp.,
which Blackstone bought in 2014, has achieved 30% utility-cost
savings over three years and 10% sustained boiler gas-cost savings
through energy-efficiency measures.
"Medium-touch" companies will be those that can use tools such
as automated building-management systems to monitor energy use,
while occasionally calling on Blackstone for advice and support.
Finally, "low-touch" companies will require fewer firm resources
and may not have as much opportunity for energy reduction, such as
a financial-services company that doesn't own its own office
building.
Emissions reductions could come through replacing light
fixtures, recalibrating heating and cooling systems, introducing
low-flow faucets and shower heads or replacing windows to trap hot
or cool 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."
Efficiency measures often come with upfront costs but can also
result in significant cost savings down the line. Hilton Hotels
Corp., which Blackstone owned from 2008 to 2018, cut carbon
emissions by 30%, waste by 32% and energy and water usage by 22%,
saving more than $1 billion over the course of its ownership. The
firm reduced energy consumption by 18% at the Cosmopolitan Hotel in
Las Vegas, yielding $1.8 million in savings over the past six
years.
Blackstone has also generated significant energy savings by
installing solar panels on the rooftops of its massive portfolio of
U.S. logistics warehouses and on Manhattan residential development
Stuyvesant Town. Those developments cover 9 million square feet and
nearly 1 million square feet of rooftops, respectively.
Write to Miriam Gottfried at Miriam.Gottfried@wsj.com
(END) Dow Jones Newswires
September 29, 2020 07:14 ET (11:14 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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