2020 IMPACT REVIEW 2020 IMPACT REVIEW Inside the Impact Review Letter from Kew & Glenn Building Intro from Meg Starr Impact Themes Better Our Impact At Carlyle Businesses GRI Disclosures INSIDE THE IMPACT REVIEW 2020 IMPACT REVIEW 3 LETTER FROM OUR CO-CEOs Kewsong Lee and Glenn Youngkin 4 OUR APPROACH TO IMPACT Meg Starr THE IMPACT OF BETTER BUSINESSES 14 Diverse Teams Engaged Employees Sustainable Growth Drivers of Better Business COVID-19 Response Climate Resilience Stronger Communities 2020 IMPACT REVIEW 15 Abacus Accelerate Accolade Wines Cardinal Renewables CommScope HireVue Jeanologia Case Studies Inside the Impact Review Neptune Novolex PA Consulting Penha Longa PPD USRE Ver ita s Weiman Letter from Kew & Glenn 72 OUR IMPACT AT CARLYLE Intro from Meg Starr What We’re Doing Impact Themes Our Impact At Carlyle GRI DISCLOSURES 89 GRI Disclosures Global Reporting Initiative Disclosures GRI Disclosures Letter from 2020 IMPACT REVIEW our Co-CEOs Kewsong Lee & Glenn Youngkin From due diligence through diverse and inclusive teams, engaged employees, exit, our impact approach at sustainable growth, climate resilience, and strong community ties – for which we have clear The Carlyle Group is rooted investment theses and specific case studies of in building better businesses. value-creation in our investments. We have also doubled down on integrating these factors into our own practices as a corporation, highlighted This year’s publication, renamed the Carlyle within the “Our Impact at Carlyle” section per 2020 Impact Review, speaks to our expanded theme. With our conversion to a C-corporation focus on pushing this long-term strategy at the beginning of this year, we have increased forward. We believe that taking a comprehensive the transparency and detail of our own corporate approach to driving impact within businesses ESG disclosures through our first Global leads to better investment results and more Reporting Initiative (GRI) and Sustainability sustainable returns for our investors and Accounting Standards Board (SASB) disclosures shareholders. on pages 89-112. While we’ve been at this for over a decade, never We believe that by building better businesses Inside the Impact Review has the importance of this work been more across our full $217B portfolio we can generate clear than in our response to COVID-19. Our more resilient economic returns alongside platform has mobilized rapidly and effectively to Letter from Kew & Glenn significantly greater impact. Simply put, at help our portfolio companies and communities Carlyle, impact isn’t a product; it’s a process – navigate the rapidly changing global situation on the process of building better businesses. We pages 6-14. This work remains grounded in our Intro from Meg Starr have much work yet to do, but we are clear long history of ESG integration, as we believe about where we are headed, and appreciate the that strong ESG competencies are hallmarks of partners who have helped us push forward on management excellence. This commitment is Impact Themes this journey. critical for investment performance, particularly in moments of dislocation and exogenous shocks, as experienced during the COVID-19 crisis or Our Impact At Carlyle climate-related extreme weather events. The 2020 Impact Review focuses on the core GRI Disclosures of our impact investing approach, the five key facets we believe drive better businesses – Kewsong Lee Glenn Youngkin Co-Chief Co-Chief Executive Officer Executive Officer *AUM as of 3/31/20 OUR APPROACH TO IMPACT Throughout its history, Carlyle has worked to be at the vanguard of ESG integration. We codified our Guidelines for 2020 IMPACT REVIEW Responsible Investment in 2008, published the first private equity sustainability report in 2010, hired our first dedicated ESG professional in 2014, and have since expanded the ESG team globally. In 2018, we hired our first Chief Inclusion and Diversity Officer and became the earliest major private equity firm to go carbon neutral (page 85). In 2019, we sought to propel our work even further, and decided to leave the lexicon aside and return to our core: at Carlyle, our impact is grounded in building better businesses. BY Inside the Impact Review The 2020 Impact Review focuses on two Building off our core work of ESG Meg Starr main approaches of our impact strategy: integration, we believe our focus on the Letter from Kew & Glenn below three priorities will allow us to Global Head of Impact address the most pressing issues as we 1 Investments in which Carlyle – through Intro from Meg Starr expertise, resources, capital, and time – continue to push forward: partnered with management teams to drive measurable change on material ESG issues, Collecting better data – for specific ends: Impact Themes such as our work driving sustainable growth with Weiman (page 39); and While we track bespoke ESG key performance indicators (KPIs) for certain investments (e.g. Our Impact At Carlyle Investments with a growth thesis predicated 2 Carlyle Europe Partners is in its fourth year on an impact macro-theme, such as our collecting company-specific material ESG KPIs), investment in Cardinal Renewable Energy GRI Disclosures we have expanded this approach to track broad- (page 46), capitalizing on the opportunities of based KPIs that are relevant across diverse the global energy transition geographies and assets. Both approaches play different but increasingly vital roles in our investment process. Tailored company-specific data helps identify risks and opportunities, OUR APPROACH create value-creation plans, and measure progress Innovating on the impact of private capital: over time, while cross-portfolio information helps us TO IMPACT understand and manage systemic risks and perform As we push forward, we are committed to creatively designing new approaches to driving impact, from 2020 IMPACT REVIEW comprehensive research on value creation drivers. strategic resourcing to novel financial structures. We Notably, we recently identified the correlation highlight examples in this Impact Review, including between board diversity and annual earnings growth Jeanologia’s ESG-linked term loan (page 33), and across our portfolio companies, highlighted in the Carlyle’s significant commitment to identifying Impact Report. investment opportunities in emerging impact growth markets, as seen through the Renewable and Setting and achieving ambitious goals Sustainable Energy platform launched in 2019. for systemically important issues: Our impact as a firm is grounded in collaboration We continue to work with individual portfolio across our Carlyle community. We look forward companies – through diligence, the investment to expanding this work and engaging our external period, and exit – to drive value on material ESG partners to continuously improve the strategy, issues. We also recognize the need for systematic application, and tools that drive value and have the and strategic action across our global portfolio. We maximum impact to build better businesses together. believe mobilizing the unique tools of private capital across our full $217B portfolio creates scalable impact, while ensuring companies are well-positioned to navigate emerging challenges. To that end, knowing empirically from our data that portfolio companies with diverse boards perform better, we have set ambitious goals on board diversity across some of our largest investments (page 84). We continually evolve Meg Starr our approach of balancing company-specific work BY with broad-based portfolio-wide action to address Global Head of Impact Inside the Impact Review our companies’ most pressing challenges. Meg Starr Letter from Kew & Glenn Global Head of Impact Intro from Meg Starr Impact Themes Our Impact At Carlyle GRI Disclosures COVID-19 OUR RESPONSE 2020 IMPACT REVIEW COVID-19 Our Response Inside the Impact Review Letter from Kew & Glenn Intro from Meg Starr Impact Themes Our Impact At Carlyle GRI Disclosures 6 COVID-19 Our Response 2020 IMPACT REVIEW ARIZONA: Walbro – CJP II – CALIFORNIA: One Medical – CP VII – Carlyle companies Global provider of engine Operator of membership-based combating COVID-19 management and fuel systems primary care practices Walbro is using its engineering and manufacturing One Medical is providing critical front-line Carlyle’s capital, network and capacity to develop ventilators and equipment to healthcare services across the United States. resources have empowered our protect healthcare providers during the intubation During the early days of the pandemic, the portfolio companies to deploy of patients. Company created virtual COVID-19 screening innovative products, services services and physical drive-up testing sites across and initiatives to directly its key geographies. One Medical also made its combat the spread of COVID-19, services available across the U.S. on a virtual- enable business continuity and BRAZIL: Rede D’Or Sao Luiz – CP VI/CSABF – only basis, significantly expanding access to support their communities. Largest private hospital chain in Brazil critical primary care services for patients. Most recently, One Medical developed comprehensive This is a selection of initiatives Rede D’Or Sao Luiz is providing care for COVID-19 clinical protocols and technology solutions for its we are proud to support across patients in its hospitals and is working with state employer clients to implement “Return to Work” the globe. governments to expand capacity for the public strategies, which include screening, testing, and health system. Rede D’Or