David Rubenstein: ESG Will Have a Big Role in Private Markets


The Carlyle Group Exec Spoke at the Greenwich Economic Forum

David Rubenstein said that ESG factors now play a big role in how investors allocate capital in the private markets. The Carlyle Group co-executive chairman discussed environmental, social, and governance issues at the Greenwich Economic Forum.

Rubenstein suggested that managers who don’t have a plan to address growing ESG demand will find themselves struggling to compete.

“Today, if I were to start all over, or anybody were to start all over (in private equity), you would be much more worried about ESG factors than you had been (historically),” Rubenstein said.

David Rubenstein: Changes Ahead for Money Managers

Rubenstein said that private equity firms will still attract investors “if their internal rate of return (is) high” without integrating ESG. However, Rubenstein stated that “at some point down the road, that will probably change.”

Megan Starr, head of impact investing at Carlyle Group, echoed that sentiment. She noted in an afternoon session that green bond demand remains high in Europe. However, Starr notes the limited issuance in the industry. This divide “creates a really interesting opportunity from the perspective of a private equity investor,” she said.

Finally, the ESG push came the same day that the U.K. minister for pensions and financial inclusion said that pensions should fire managers who ignore climate change.

Related: Leon Cooperman: Stop Vilifying Billionaires

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