Banks and private equity can lead by example by setting their own ESG goals

• Banks and investment firms have an opportunity to model good governance for their clients.
• The topic was discussed during Insider's virtual event "Financing Net-Zero," presented by IDA Ireland, which took take place on Thursday, May 13, 2021.

Financial institutions like banks and private-equity firms can model environmental, social, and environmental (ESG) practices for their clients, according to experts speaking at a recent Insider event, titled "Financing Net-Zero" on May 13, 2021, presented by IDA Ireland.

A panel titled "Global Outlook for Sustainable Finance" featured Megan Starr, global head of impact at The Carlyle Group, Melissa James, vice chairman of global capital markets and co-head of the ESG center for excellence at Morgan Stanley, and Sandip Sen, co-head, natural resources and clean energy transition group at Citi. The session was moderated by Reed Alexander, finance reporter at Insider.

Alexander asked Starr about Carlyle's recent announcement that the firm would tie compensation at all levels, including the CEO, to diversity, equity, and inclusion (DEI) goals.

Starr said that with evidence pointing to better outcomes for diverse teams, it's critical that not only the portfolio companies, but the investment firm itself, make progress in DEI, particularly since deal team members are often put onto portfolio company boards.

The influence isn't limited to social and governance goals, Alexander said. When Jane Fraser, Citi's CEO, took her position on March 1, 2021, she committed the bank to net zero greenhouse gas emissions by 2050.

"Our commitments to closing the gender pay gap, to advancing racial equity, and to pioneering the green agenda have demonstrated that this is good for business and not at odds with it," Fraser said in a statement. "And we will continue to be part of the solution to these challenges and enable others to do so as well."

Sen told the audience that by setting this ambitious goal, the bank embodies best practices, while encouraging clients to do the same. "To the extent that our clients are not sort of complying or coming along, we are here to help them." Sen said. "I think it's a tough goal for everybody ... but most of the world appears to be moving in the right direction. So hopefully we can all get there together."