Carlyle launches new loan program to incentivize greenhouse gas reduction

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Carlyle Global Credit has launched a lending program that incentivizes borrowers to reduce greenhouse gas emissions and meet climate goals.

Carlyle called the “decarbonization-linked finance program” one of the first such initiatives in US private credit. Borrowers can reduce interest charges by meeting prescribed targets. More details were not available.

“Through the program, Carlyle provides a pricing advantage tied to the borrower’s achievement of tailored decarbonization targets or other climate-related KPIs,” according to a company statement today. “Carlyle and participating borrowers will work closely together to assess and monitor appropriate KPIs, while Carlyle’s dedicated ESG team will provide ongoing support and expertise to help borrowers achieve their climate-related goals.”

Carlyle believes this effort “could lead to significant carbon emission reductions within our portfolio over time.”

“This innovative decarbonization-related financing program provides another opportunity for Carlyle to support its investment portfolios in a changing world and drive meaningful action on the transition to a low-carbon future,” said Megan. Starr, Carlyle’s global head of impact, in the statement. . “As an uncontrolled asset class, credit has understandably lagged private equity’s ability to collect ESG data and drive ESG improvements. This new approach responds to both of these challenges.

At the same time, Carlyle said it had reached two agreements with “decarbonization-related conditions”:

  • Fairway Lawns — Carlyle Global Credit was the sole administrative agent, bookrunner and arranger of the financing. Morgan Stanley Capital Partners acquired the company. The company provides residential lawn care services in the southeastern United States.

  • The Carlstar – Carlyle Group was the lead investor and administrative agent on the credit facilities backing a refinancing. The company has been an investment of American Industrial Partners since 2013. The company sells specialty tires and wheels.

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