Predictions of the death of sustainability-focused private investing are looking distinctly overstated, at least going by the recent announcement of a partnership between Carlyle AlpInvest Partners and the California State Teachers’ Retirement System (CalSTRS).
The partnership “is designed to expand CalSTRS’ ability to invest alongside private equity managers in climate solution opportunities beyond CalSTRS’ direct investment programme”, according to their joint statement.
Carlyle AlpInvest accounts for some US$97 billion of the Carlyle Group’s $447 billion of assets under management.
“Partnering with Carlyle AlpInvest will help add the scale and execution expertise needed to advance our investment objectives,” according to Nick Abel, portfolio manager of CalSTRS’ sustainable investment and stewardship strategies. He adds that the collaboration “enhances the way we access opportunities to further position CalSTRS as a global partner of choice and supports our commitment to delivering financial results alongside positive sustainability outcomes”.
CalSTRS, the world’s largest educator-only pension fund managing about $333 billion, certainly has the investment muscle and the credibility to drive such an initiative and bring other institutional investors on board as co-investors. It already has a $20 billion net zero portfolio.
One encouraging trend for the partnership is the number of major clean energy projects that are already under way or in the planning stage. According to a report from the International Energy Agency, the energy sector is expected to see $3.3 trillion of capital flows this year, up 2% from 2024.
The agency says investment trends are being shaped by a rapid rise in electricity demand for industry, cooling, electric mobility, data centres and artificial intelligence, and that spending on low emissions power generation has almost doubled over the past five years.
Another more cynical interpretation is that the partnership between CalSTRS and Carlyle AlpInvest is an extra draw for institutional investors who have pulled back from mainstream private equity lately due to falling returns and delays in achieving liquidity events.
The statement emphasises the contribution of Carlyle AlpInvest’s co-investment platform. That seems very much pitched with a limited partner audience in mind.
