Our
Sustainability
Framework

How we Integrate Environmental, Social and Governance
Considerations into Our Investment Process

Our overriding objective is to identify and monitor the most relevant ESG issues, both to reduce risk and create value. To that end, we provide our deal teams and portfolio companies with the resources and information they need to manage ESG issues effectively.

We have formalized this approach through internal policies and processes that track ESG integration. Our extensive experience, deep knowledge and expertise, and ongoing dialogs with our investors are all essential ingredients in ensuring that our strategy succeeds in reducing risks and enhancing value creation wherever possible.

The more we execute on this approach, the more deeply ESG aspects are integrated into every investment—and the more valuable this integration becomes for the firm, our clients and our portfolio companies.

Our sustainability framework leverages our Guidelines for Responsible Investment, strong governance, dedicated Chief Sustainability Officer, and close involvement from due diligence through ownership.

Guidelines for Responsible Investment

Our Guidelines for Responsible Investment lead us through each transaction. Developed in 2008 and later adopted as the industry standard by the American Investment Council (AIC), these guidelines provide our global deal teams with a clearly defined policy to follow during the investment process.

Respect the human rights of those affected by their investment activities and seek to confirm that their investments do not flow to companies that utilize child or forced labor or maintain discriminatory policies.

PRINCIPLE 7, FROM CARLYLE’S

GUIDELINES FOR RESPONSIBLE INVESTING

The guidelines draw on international standards, including the UN Principles for Responsible Investment and the UN Global Compact, and align with General Partners’ roles and responsibilities as owners and Board members. You can view our Guidelines for Responsible Investment on our website (www.carlyle.com/citizenship).

We require Carlyle-controlled portfolio companies to review the guidelines once a year at a board meeting and affirm that company practices are consistent with this policy. For the past three years, 100% of Carlyle-controlled buyout and infrastructure companies reviewed their operations in accordance with our responsible investment guidelines.

The guidelines draw on international standards, including the UN Principles for Responsible Investment and the UN Global Compact, and align with General Partners’ roles and responsibilities as owners and Board members. You can view our Guidelines for Responsible Investment on our website (www.carlyle.com/citizenship).

We require Carlyle-controlled portfolio companies to review the guidelines once a year at a board meeting and affirm that company practices are consistent with this policy. For the past three years, 100% of Carlyle-controlled buyout and infrastructure companies reviewed their operations in accordance with our responsible investment guidelines.

Experienced leadership and strong governance

Our founders recognize the value and benefits of maintaining a business model grounded in investment fundamentals, strong governance and transparency. We maintain strong internal corporate governance processes and fiduciary functions and are subject to regulatory supervision.

Carlyle professionals receive regular and targeted training on many issues related to corporate governance and compliance, including anti-corruption, conflicts of interest, economic sanctions and anti-money laundering. All employees certify their understanding of and compliance with Carlyle’s global policies and procedures annually. Our Office of General Counsel provides expertise and support on all governance issues.

A Dedicated Chief Sustainability Officer

Our Chief Sustainability Officer (CSO) supports deal teams, portfolio companies and our LPs on environmental and social issues, and engages with the broader financial and ESG community to advance sustainability in finance. Senior External Affairs team members provide support on a variety of related issues. We engage external experts as appropriate for environmental and social assessments in due diligence, and to help develop mitigation plans in areas needing corrective action.

Executing in due diligence and ownership

Our formal procedures ensure that every deal includes a review of material issues during due diligence that is shared in the investment committee memo. Deal teams access relevant expertise through several channels: input from our CSO, expert consultants who may conduct specific ESG assessments, and/or by using third-party guidance, such as the Sustainability Accounting Standards Board (SASB) standards.

Throughout our ownership, we support the management teams of our portfolio companies in their journeys to take sustainability to the next level, whether their sustainability programs are developing or mature. Our CSO and/or outside experts can provide more detailed ESG support to reduce risks or create value.

Our investment process seeks to deliver three outcomes.


Risk management. We strive to ensure that Carlyle and our investment professionals understand and can monitor current and emerging risks. While risk management strategies frequently evolve over time, we are increasingly confident in our ability to identify and manage ESG risks, including responding to incidents if they occur.

Capacity building in companies around ESG management. We support portfolio companies in building internal capacity in sustainability. Customers, employees, suppliers, competitors and other stakeholders expect companies to manage ESG issues related to their business.

Value creation: We continuously look for sustainability initiatives that can sup-port the three key areas of customers, cost and competition while focusing on the core role of employees. Increasingly, portfolio companies see sustainability as an effective tool for creating value by improving products, addressing customer needs and desires, building brands to beat the competition, recruiting and retaining the best workforce, and lowering costs through more efficient operations.