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Private equity firms plow billions into fossil fuel operations in their ruthless quest for profits.

In recent years, the climate movement has focused on several culprits who are financing and underwriting climate catastrophe, including banks, asset managers, and insurance companies. But of all the major fossil financers, private equity may be the most opaque and secretive Wall Street profiteer. 

Across the world, private equity firms that collectively oversee trillions in assets own hundreds of oil, gas, and coal companies across a fossil fuel portfolio that stretches into the hundreds of billions of dollars. From oil and gas pipelines and fuel storage facilities to LNG export hubs and fracking operations, private equity firms are a major player in the landscape of fossil fuel operations and infrastructure.

Moreover, the billionaire heads of top private equity firms are extremely influential, having used their wealth to shower universities, cultural institutions, and think tanks with donations in exchange for prestigious board seats and vanity projects like schools, halls, and forums that bear their names. These private equity barons are also closely tied to the commanding heights of political power, including U.S. presidents, through big campaign contributions, friendships, and other forms of insider access.

But despite the power of private equity, it does have vulnerabilities that organizers can leverage, including the fact that many foundations, universities, and worker and union pension funds invest with these firms. Moreover, because private equity’s reach stretches across the entire economy, there are plenty of opportunities for activists across campaigns to make common cause.

What is private equity and why does it matter?

But first: what is private equity?

To put it most simply, private equity firms invest in private companies. Many companies are public, meaning that they are listed on the stock market and anyone can buy shares in them. Because they’re public, they also have to disclose more information about their business operations and governance, and they are more closely watched and regulated.

But not private companies. They are privately-owned and therefore subject to much less visibility and scrutiny. These are the kinds of assets — private companies — that private equity firms focus their investments on. 

Private equity as an industry is hugely powerful. Private equity firms alone oversee a whopping $7.5 trillion in assets. Some of the more well-known firms include the likes of Blackstone, Carlyle Group, KKR and Apollo Global Management, which invest in a wide range of sectors, as well as energy and energy infrastructure focused firms like EnCap Investments, ArcLight Partners, Lime Rock Partners and Global Infrastructure Partners.

Here’s how it works: Private equity firms establish huge “funds” that institutional investors and wealthy clients, as well as private equity firms themselves, invest in, and then they use the pooled money in these funds to buy companies.

Once they buy these companies, private equity firms are notoriously ruthless, with a laser-like focus on quickly raking in huge profits, typically through loading up their companies with debt, stripping and selling off their assets, cutting jobs and imposing wage cuts on workers, and then selling off the company a few years later.

When it comes to their clients, private equity managers charge huge fees: typically 2% annually of the amount that clients invest plus 20% of any gains. These firms thus have an incentive to aggressively pursue huge profits quickly. It’s no surprise that private equity CEOs and partners are among the world’s wealthiest people.

You might think that these kinds of business dealings would make private equity barons unpopular, but you’d be wrong. These billionaires use their vast riches to make donations to universities, libraries, galleries, cultural centers, and museums, all to wash their public image and stay in good social favor so as to protect their core financial interests and distract from their extractive and exploitative business practices. Many also donate huge amounts to politicians as a way of buying access to and influence with top policy makers.

Private equity and fossil fuels

As a financial sector, private equity has a huge stake in energy, and specifically in fossil fuels. Dozens upon dozens of pipelines, refineries, drilling operations, and power plants that are driving climate chaos and polluting communities are owned by private equity firms.

According to the research group Reclaim Finance, during 2020 and 2021 alone, private equity firms “bought $60 billion of oil, gas, and coal assets from energy companies through 500 transactions.”

An October 2021 report published by Private Equity Stakeholder Project noted that private equity firms had invested $1.1 trillion in energy assets since 2010 and that ten of the largest firms had 80% of their energy portfolio in fossil fuels. A September 2022 Private Equity Stakeholder Project report highlighted some of these investments in fossil fuels. For example:

  • The Carlyle Group, combined with NGP Energy (an energy-focused private equity firm that Carlyle has a controlling stake in), had 55 energy portfolio companies, of which 42 were in fossil fuels. 
  • Brookfield Asset Management, combined with Oaktree Capital (a private equity firm that Brookfield has a controlling stake in), had 75 energy portfolio companies, of which 40 were in fossil fuels. 
  • KKR had 36 energy portfolio companies, of which 28 were in fossil fuels. 
  • Blackstone had 21 energy portfolio companies, of which 11 were in fossil fuels. 
  • Warburg Pincus had 29 energy portfolio companies, of which 28 were in fossil fuels.
  • Ares Management had 21 energy portfolio companies, of which 16 were in fossil fuels.

Another metric provided by Private Equity Stakeholder Project that conveys private equity’s vast investments in energy is that just eight of the world’s largest private equity firms — Carlyle Group/NGP, Warburg Pincus, KKR, Brookfield/Oaktree, Ares, Apollo, Blackstone and TPG — together held around $216 billion in energy and fossil fuels assets as of 2022. That’s about the same as the total fossil fuel industry financing of the world’s top six banks!

It’s not just that private equity has a big stake in fossil fuels. The industry is also tremendously opaque — thus the “private” in private equity — and does not need to disclose nearly as much information as publicly traded companies. Hence, they drive climate chaos with much less scrutiny than other actors. 

Moreover, private equity has steadily been buying up tens of billions of dollars worth of energy assets from public markets and transferring them to private markets where these operations’ climate impacts will face less scrutiny. For example, in June 2021, KKR’s Contango Oil & Gas acquired 446 billion cubic feet equivalent of oil and gas reserves in Wyoming from ConocoPhillips with a plan to increase production in the reserves by more than half.

These acquisitions are all the scarier because of private equity’s dismal records on climate issues. According to Private Equity Stakeholder Project’s September 2022 climate scorecard (endorsed by LittleSis), seven of eight top private equity firms scored a “D” or “F” across five climate demands such as “Disclose Fossil Fuel Exposure, Emissions and Impacts” and “Integrate Climate And Environmental Justice.” 

Carlyle Group earned the sole “F,” with 76% of its energy portfolio in fossil fuels and no known climate commitments around the five demands. Its 10.8 million metric tons in U.S. downstream CO2 pollution in 2020 — equivalent to the emissions of over 2.4 million vehicles annually or nearly 25 million barrels of oil consumed — was second only to Blackstone. Warburg Pincus, KKR, Brookfield, Ares, Apollo, and Blackstone all received D’s.

Notably, private equity is also building out and gobbling up renewable energy infrastructure projects, with their promise of subsidies and steady payments, even as firms stay committed to fossil fuels. Indeed, the “green” transition may also represent a transition into more entrenched power of private equity over our energy systems. Given private equity’s focus on wealth extraction and its lack of oversight and accountability, this would be an ominous development for democratic decision-making over our energy priorities for the future.

Private equity’s influence operation: lobbying, networking, philanthropy

Like other sectors, private equity firms have their own industry lobbying apparatus. A key player is the American Investment Council (AIC), which calls itself “an advocacy and resource organization established to develop and provide information about the private investment industry.” The major private equity firms are all represented on its board, and its members include the biggest law firms, who rake in millions working with Wall Street.

The American Investment Council is a lobbying powerhouse. In 2022 alone, it spent over $4 million in lobbying just the federal government. Its lobbying team included in-house lobbyists as well as six outside firms. 

The AIC’s President and CEO since 2018, Drew Maloney, was a fossil fuel lobbyist from 2012 to 2017, serving as Vice President of Government and External Affairs for the Hess Corporation. Immediately prior to joining the AIC, Maloney served in the influential position of Assistant Secretary of the Treasury for Legislative Affairs, whose role is to “advise the [Treasury] Secretary on congressional relations matters in order to assist in the formulation of policy and determining the overall direction of the Department.” According to his biography, he’s also “advised several presidential campaigns and transition teams.”

But the influence machine of private equity firms might be best illustrated by looking at specific examples of the networks, philanthropy and campaign contributions of some of its biggest players whose firms are all waist deep in dirty fossil fuel investments.

Blackstone Group and Stephen Schwarzman

With one trillion in assets under management, the New York-based Blackstone Group is the biggest private equity firm in the world. Chairman and CEO Stephen Schwarzman is worth $31.9 billion. In addition to huge investments in real estate and other areas, Blackstone is a major fossil fuel stakeholder, with an oil, gas, and coal portfolio of at least 11 fossil fuel companies as of September 2022, with operations responsible for 18.1 million metric tons in U.S. downstream CO2 pollution in 2020 — equivalent to the emissions of over 4 million vehicles annually or nearly 42 million barrels of oil consumed.

Moreover, Blackstone’s portfolio includes numerous oil and gas producers and pipeline companies. It’s a co-owner of the Gavin coal plant in Ohio, the sixth-dirtiest power plant in the U.S. in 2021. The plant was ordered by the EPA in 2022 to cease dumping toxic coal ash into unlined storage ponds. In 2020, Blackstone also disclosed a 6.9% stake in Energy Transfer, owner of the Dakota Access Pipeline.

Schwarzman was a major ally and donor to former President Donald Trump, serving as a top economic advisor and chair of Trump’s Strategic and Policy Forum. He donated millions to Trump and personally hosted fundraisers for him, and spent tens of millions overall during the 2020 election cycle. Moreover, his huge fortune made from fossil fuels and other industries has allowed him to acquire expensive mansions across the world and throw himself outrageous multi-million dollar birthday parties that politicians and celebrities flock toward.

Schwarzman is able to buy good favor through showering donations on cultural institutions and universities — in exchange of course, for his name being emblazoned on building facades. For example, there is the New York Public Library’s Stephen A. Schwarzman Building, the Schwarzman Center at Yale, and the Schwarzman College of Computing at MIT. Schwarzman has also been a member of key boards and think tanks that serve as elite meeting points, such as the Council on Foreign Relations, the Partnership for New York City, the Kennedy Center, and the Business Roundtable.

Carlyle Group and David Rubenstein

As mentioned above, Carlyle Group, which oversees $385 billion in assets, has one of the biggest fossil fuel portfolios and, according to the Private Equity Stakeholder Project’s climate scorecard, the worst climate record of all big private equity firms. But this hasn’t stopped its most public-facing figure, co-founder and co-chairman David Rubensein, from being lauded as a hero in public life. 

Rubenstein is one of the most well-networked private equity billionaires in the U.S. He fashions himself a renaissance man, writing books and hosting a show where he interviews big movers and shakers in global finance and business. President Joe Biden has even spent Thanksgiving at Rubenstein’s Nantucket compound.

Rubenstein holds powerful positions in the nation’s most influential galleries, cultural centers, think tanks, and business clubs. He is the Chairman of the National Gallery of Art, the Kennedy Center for the Performing Arts, the Economic Club of Washington DC, and the Council on Foreign Relations, as well as Chairman Emeritus of the Brookings Institute. He is a director of both the Lincoln Center for the Performing Arts and the American Academy of Arts and Sciences, a trustee of Johns Hopkins Medicine and a former trustee of Harvard University, and chairman of the board of trustees of the University of Chicago.

Enlightened as he may believe himself to be, Rubenstein is a dedicated lover of oil and gas and has raved about investing in “carbon-related energy.” An April 2023 Private Equity Stakeholder report found that Carlyle and Rubenstein had a whopping $22.4 billion invested in carbon-based energy, and that it invested $16 in fossil fuels for every $1 it invested in renewables.

KKR and Henry Kravis

KKR oversees $510 billion in assets, and that includes a multi-billion dollar fossil fuel portfolio that counts one of the world’s most controversial pipelines, the Coastal Gaslink Pipeline, among its assets. The 400-mile fracked gas gas pipeline that is being built through unceded Indigenous territories in Canada has faced intense opposition from Indigenous and climate activists. KKR has a majority stake in the pipeline

The most prominent public face of KKR is its co-founder and co-executive Chairman Henry Kravis, worth around $8 billion. Despite being profiting off climate catastrophe, Kravis has no problem gaining accolades from prestigious universities and cultural institutions that he showers with donations. He is the recent former co-chair of the Board of Overseers of the Columbia Business School (he remains a board member) and gave the school an astounding $125 million to build “The Henry R. Kravis Building” at its Manhattanville campus. Kravis is also a Trustee of Claremont McKenna College in California.

Moreover, Kravis is a big player in the world of high art. He and his wife, Marie-Josée Kravis, boast a personal collection that includes paintings by Jean Renoir and Claude Monet. Marie-Josée Kravis chairs the board of New York’s Museum of Modern Art (MoMA). Climate activists recently crashed MoMA’s annual gala demanding the museum drop Kravis over her links to the Coastal GasLink pipeline. The Kravises also own lush mansions and estates from Palm Beach to the Hamptons to Manhattan (he recently sold his Colorado estate to Michael Bloomberg for $45 million).

Like other private equity bigwigs, Kravis buys influence through big donations to politicians. 

He gave $1 million to Donald Trump’s inauguration in 2017 and was reported in the running to be Trump’s Treasury Secretary. He’s hosted fundraisers for a range of Republican politicians and made big donations to the GOP, including hundreds of thousands of dollars to the Mitch McConnell-tied Senate Leadership Fund.

Taking on private equity oil profiteers 

There’s no doubt that private equity firms are incredibly powerful. But they also have vulnerabilities that climate activists can laser in on.

One of the biggest categories of clients of private equity firms is pension funds. These include public and private sector pension funds, as well as union pension funds. Another big category of clients is university endowments. Private equity firms depend on these huge investors to raise the money they need to be able to make big investments with their funds. So, the stakeholders behind these clients — union workers, future retirees concerned about the climate crisis, students and faculty — are all in strategic positions to campaign to make their investments with private equity contingent upon climate-related conditions, such as not joining any fossil fuel funds, or even refusing to do business with firms that invest in fossil fuels. 

Also, because private equity leaders are such prominent philanthropists, their names are visible in high-profile spaces, and they’re often attending galas and other fancy events. This all broadens the surface area for organizers to protest and name-and-shame these climate disaster profiteers — and to do so exactly where they don’t want to be embarrassed, when they’re being fêted, in front of their social peers. A great example of this is the Clean Up Carlyle campaign (endorsed by LittleSis) that has protested Rubenstein’s affiliations at multiple cultural centers as well as Divest Harvard’s campaign to get Rubenstein to “Recuse or Resign.”

Finally, focusing on private equity presents the opportunity to develop broad and strategic alliances aimed at a common opponent. In addition to its role in driving the climate crisis, private equity is also an enormous landlord, a retail giant, and more. Climate activists should have no problem making common cause with housing and labor activists who are all up against the same force of private equity. Blackstone is a great example — an oil giant that is also the focus on tenant and labor activists.