Honeywell Forge: Tim & Megan

Welcome to forging connections, a podcast from Honeywell about the convergence of IT and operational technology for industrial companies. We'll talk about the future of productivity, sustainability, safety and cybersecurity. Let's get connected. Today, I'm sitting down with Megan star from Carlisle. Is the global head of impact, and she designs and executes their long term impact strategy. She also oversees the dedicated ESG. Megan, welcome. Thank you so much for having me. Awesome thank you so much for being here. So before we again, just for our listeners who may not be familiar with Carlyle talk, can you talk just a little bit about what you guys do? Sure if you'll indulge me, I think the history lesson of ESG is helpful to understand where we've been and how we got to where we are today. Yeah, great. Let's talk about it. I think in the early days that one of the central misconceptions about ESG investing is that it's values based and it's about what you care about your personal views, maybe political view. I think in the early days, it was the kind of first instance that this was people saying, you know, I don't want to have certain things in my portfolio, I'm going to divest from them, and that's kind of an act of free speech. And I think what we've seen is the world has shifted radically since then, but our conceptions have stayed rooted in some of those early iterations and trying to fast forward to where we are today. The reality is in a rapidly changing world. Companies that are thoughtful about their environmental footprint, about having engaged employees, about having diverse teams that are making well-informed decisions. Those companies are just performing better. And so this idea of ESG integration is how do we look at a broader lens of understanding company positioning and strategy to understand what companies might be better positioned to outperform in that changing world? So we've really shifted from this idea of it being a morals or a values based thing about a good company or bad company, which is not the reality of the world we live in, just being a focus of. How do we think more holistically about company performance? Yeah, I mean, I think on our end, you know, we've seen sort of a move earlier in previous years where you might have heard the term like activist investor or something. We're now you just hear investor and our investors are pushing us. And there's this been this sea change of it's not really just about activist investors pushing. It's really all investors now are asking many of our industrial customers at Honeywell, how do we enact an ESG strategy or we expect more from you, whether that's their investors or local governmental agencies or their employees or anywhere in between? There's kind of been a shift there. What do you think drove that shift? Well, I think the word is right in that phrase activism active. And I think so long we focused on these binaries of this green investment. That's a Brown investment. It's a good ESG company or a bad ESG company that is not the reality of the world we live in. And so I think what investors are now realizing and what is actually important for companies to focus on is change over time. It's not a static state, Black and white. It's about are you focusing on the most material issues for your business and improving them over time? So we see that all the time about climate change. It's not just about companies that are low carbon today that might be low carbon because there are a 15 person tech firm that is renting their office space. What's important is what a company's relative positioning is in their peer set and importantly, how they are changing that over time. Because we found that companies that are actually focused on the energy transition, increasing CapEx into green products, reducing their carbon emissions intensity, investing in the future. That positioning is actually far more important than their carbon intensity day one. And so I think your phrasing of that word activism that the focus is on active change, not static state. Yeah, that's great. And I understand that. I mean, as I'm sure you well know, Honeywell was one of the first major industrial companies to kind of put a carbon pledge out there. And we're pushing hard for it. And we're, you know, we're making good progress. But I understand that Carlyle itself was also one of the first private equity firms to kind of jump jump on the wagon. So what do you think precipitated that inside the organization? Yeah so we were really excited following the lead of some incredible companies like Honeywell, and we made a net zero commitment earlier this year in 2022. And the precipitating kind of reason for that was what we were seeing in our portfolio. We are seeing that this topic was impacting our companies across sectors and across industries. My team sometimes jokingly calls it the net zero virus, and we need some better branding for that. But the idea is you don't have to be an energy company anymore for net 0 to be impacting you. So many governments and so many corporates have made net zero pledges. They're pushing that up and down their supply chains in order to fulfill those commitments. That means you can be a company that is relative. A carbon intensive and potentially not in a very material sector, but you are being impacted by that now. So in order to win new business, in order to have a higher multiple and public markets in order to get cheaper financing, we're going to do all these things actually having a better climate strategy and stronger relative climate positioning. Really, it can have strong financial benefits. I'll give one quick example. We've done a number of ESG linked financings across our portfolio companies, and when our portfolio companies go to raise debt, they're now able to link the price of that debt to hitting specific environmental or social targets. And we've done a lot on the climate side. So, for example, we just purchase a company last year called doby, and it was spun out of on a large chemicals company. And as part of that transaction, we did an ESG linked financing where the price of their debt was linked to hitting climate targets on their journey towards decarbonization. So your debt gets cheaper now if you're making those commitments and linking it to it. And so I think we just see a host of different ways that climate is playing into real financial implications for businesses and smart businesses are trying to get ahead of that. So when someone sits down to invest in a company based on their ESG strategy, like what kinds of things are they looking for? So I think in the early days, company investors were looking for pretty easy binaries of is this a quote unquote good company or bad company? And I'm harping on that, but I really think it's true. You put the renewable energy developers and the edtech companies and the health care companies in a bucket and then you have everything else. And the reality is that means that bucket is pretty small when you look at the investable universe. And so now what investors are looking at is what is my ability to drive change that is financially accretive over this whole period? I'll give one example we do a climate risk triage for every deal that we look at now. And part of what we're trying to understand is what are the potential physical risks, climate change, transition risk and market risks that could impact this company over a whole period? We looked at a portfolio of hard assets on coastal real estate recently and we said, you know, unsurprisingly, sea level rise and extreme weather related events are probably material during our whole period. How do we understand and price that in the same way that we do price things like growing revenue? And so we hired a bunch of climate scientists and they actually helped us map out sea level rise, extreme weather related events and importantly, what that would do to the insurability of those assets. Similarly, if we're purchasing a company in a jurisdiction where there's a high likelihood of carbon pricing coming in the next 5 to 10 years, we're going to do sensitivity analysis around that. And so I think investors are using these traditional tools of underwriting and diligence, but we just have to get smarter and we have to get new data sets around things like physical risk, market risk, understanding, labor and employee engagement and productivity. Because smart investors are feathering that data into their investment analysis, that's helping them make better decisions. Yeah, that's great. And one thing that you said that I kind of want to maybe pull the thread a little bit on is that you guys actually ended up hiring a bunch of climate scientists. And, you know, 10 years ago, if you told me a private equity firm was going to hire a bunch of climate scientists, I wouldn't have believed you. So I mean, do you think that it's just it's interesting to me that the shift is not only a shift from investors, but the shift is a shift in the kind of people that you're hiring to do this kind of work. And we see that in our industrial clients as well, where they're starting to ask us about where do we find data scientists to take a look at, you know, we have all this industrial data and we need to meet our ESG goals, but we don't know how to parse the data. We don't know how to get it to a point where we can report to these governmental agencies or to our board or to our investors about our ESG accomplishments in a real and meaningful way, as opposed to what in the past may have been called greenwashing or what have you. So talk to me a little bit about how that kind of shifting the employee mix at some companies and including Carlyle totally and the types of talent you need to understand these issues and make more informed decisions is ever changing. There's a great concept in the ESG land called dynamic materiality, and it's a fancy term for what basically means it's always changing things that weren't issues five years ago or suddenly really material. And so it's not just what we know today, but how do you hire the right people to always be looking around corners and seeing what's coming? I think two things have worked really well for us. First is lean heavily on your external partners. For example, our officers are becoming experts in carbon accounting because they have to be and our law firms are really thoughtful about structuring ESG linked transactions and our consulting partners. Massive decarbonization practices now, and so I think a lot of external partners are finding ways to really embed this into their work, much like Honeywell is. And I think that the second piece is, I tell my team this all the time. You need the people that are dedicated to ESG topics and are experts in that you need the person that really understands green chemistry if that's your business or health and safety, if you're a manufacturing company. But we can't just have it be the purview of that five person team that's down the hallway around the corner. And it's like, oh, that's the ESG team. They do that right? It has to be embedded in everyone's day job, and that's actually a really incredible tool for recruiting and retaining junior folks. One of the people on my team who's excellent at her job wasn't a totally different team. When I met her, she was in a fixed income team doing short duration cash. Not a lot to do with ESG, but on her own she had been researching ways of how do I understand the carbon intensity of these issuers and build a model to tilt the portfolio, to decarbonize it, to create this new green cash strategy? And it was just phenomenal example of that was record day job. But she was curious about these topics. She was thoughtful about how they applied to her work. And I think we're seeing a lot of how do you empower folks across your organization to say, how does this apply to procurement? How does this apply to building management? How does this apply to our sales team and equipping them to talk about our sustainability so we can drive more value? And so I think a big part of it is helping everyone see where it's a part of their job, not just having be a small corner of the organization. Yeah, that's great. Yeah and it seems to me that especially the younger generations coming in, not only is it a boon for talent, but it's also about talent retention as well. And so you've got, you know, a problem that we face at Honeywell and many of our customers face. We've got that kind of talent and knowledge gap that's about to come in, accelerated by covid, of course, but the iceberg was already floating before COVID. If you've got this massive generation of boomers about to retire and they've been holding onto their jobs for a lot longer than previous generations, so you've kind of been having this kind of pent up demand. I mean, do you do you see that continuing as things move forward and just becomes kind of a standard practice because of how infused it is across the org? And it's not just kind of tucked away in a department somewhere now. I think it's a core competitive edge for companies that do it well. We have an awesome portfolio company called d��pit, and they're an award winning digital agency based in Europe, and they went through a really hard and kind of labor intensive process to become a certified B corp, which basically means they go through this external certification process and show that they are really a purpose driven organization. They score well across these dimensions of ESG. And when I talked to their CEO, Demi Alvarez, about it, you know, trying to say, like, you know, you guys are a digital agency, you're mostly people. You don't have a big environmental like, why did you go through all that work for the certification? And his response was talent like this is what matters to my people. And clearly demonstrating that they work for a place that aligns with their purpose and cares about these topics. And we have clear validation of it that is critical for winning the talent game, which in his field of digital creation and engineers. That's your competitive mode. And so I think CEOs and management teams are really realizing this isn't about necessarily taking a political stance. This is about demonstrating that there is clear purpose in what your job is every day, and that their avenues for you to work on environmental and social outcomes that are embedded to what you're trying to accomplish together, because that's actually really key for productivity, for engagement, for motivation and importantly, recruiting and retaining top talent. And let's kind of dive into to you a little bit. What got you into esg? Was this something that like when you were at Harvard and Stanford and you were like, did you enter that saying, I'm going to be into ESG or did you kind of have an evolution? How did that happen? Well, to go back to my childhood? Love it. Yeah, I was actually raised relatively off the grid. I do wonderfully environmentally focused parents. But in the house we had solar panels for electricity and we had a wood stove for heat and we set a lot of clothes and we grew a lot for food and chickens and bees and the whole nine yards. And so I grew up in a family that was really focused on the kind of deeply personal side of environmentalism. What is my impact on the world around me? And I think because I went through school and thinking about business and what career I wanted to be, and I realized that we need to find ways to make the economically rational choice, the environmentally sound choice, because we need to get billions of people moving in the direction that my parents proactively chose to move in. And so how do we think about these levers of capital markets to further structure in this convergence of profitability and progress? Because we have to find ways for those two things to move in tandem? We can't switch a flip, flip a switch and be on all renewables overnight, because what would happen if we moved our hydrocarbons from our economy would be a worldwide economic crash. And so we have to be thoughtful about these things that could just transition and how do we use the tools we have today but start slightly adjusting incentives, moving our capital, thinking creatively to really find business models that are helping us solve environmental and social issues profitably? That's how we get the most scale and leverage. Yeah, Yeah. I think that's kind of the biggest shift that I've seen personally. You know, I went to like a private hippie liberal arts college in Vermont. And, you know, back in those days, it was all about just stormed the gates. Since then, I've seen it's like there's just been kind of a figuring out that if you make a solid business case, you can really get people to move that needle as opposed to kind of trying to guilt them into it or force them into it in some way that there's been a real case of, let's look at this holistically and take it from a business perspective. But but do it for the right reason. Yeah, I'm kind of embarrassed to admit, but I was one of those college students that was part of the fossil fuel divestment protests. And yeah, now I very much believe that the only way to have an energy transition is to invest in energy, not divest from it. Energy companies are the companies that have some of the largest CapEx budgets that have the best expertise and have these global footprints that have to be a part of the energy transition. And so I think this whole idea of, again, I keep coming back to this Black and white like those are bad companies. Those are companies that we need to invest in so that they have the capital and the expertise and the management incentive to be transitioning as fast as possible. This idea of somehow divesting from them, that doesn't change a single molecule of carbon in the atmosphere that makes the problem someone else's. And so I'd rather stay owners and responsible owners of actually really helping to more forcefully push that transition forward as opposed to kind of walking away from it. That's great. Yeah and thinking about if a company comes to you or you're pitching a company, what are some advice that you have for a company that knows they want to adopt a more ESG friendly business approach? What are what are a few tips that you would give someone in that situation? So I'd say three main things. The first is you do not need to be all things to all people trying to solve. 150 different ESG issues is a recipe for disaster. Focus on the 2 1 maybe three that are core to your business and have it be really connected to business strategy. If you're a tech company focusing on employee health and safety, it's not that material, not a great use of your time. Conversely, if you're an energy company, if you're not focusing on climate and energy transition, that is going to be business critical for you. And so first point is, don't try to solve all things, find the few that really matter and connect them to your core business strategy. The second is figure out what kind of your tactical implementation plan is, who is in charge, where does that responsibility fall, and how do they report up to the most senior levels of management? This can't be something that is the purview of investor relations or comms, or somewhere where it's going to be pushed off to the side. This has to be with real oversight. And the third piece is you don't need to measure a million things. You need to measure the things that matter. So find a few things that are quantitative and performance targets on and figure out how to measure those your year and be as transparent as you're able to because actually having data to back up. And that oversight is really critical, so don't boil the ocean focus in, make sure there's really clear oversight up to the senior levels of the organization and measure a few things and try to optimize for those. Yeah, I think one element of ESG that tends to get lost is the gee, Yeah. And like, is there? Is there a standard way of measuring or some way to know you've done? What you set out to do at Honeywell, a lot Alvaria. Customers have come to us and say, look like we know we have a problem, whether it's ESG or digital transformation or regulatory, whatever they come to us and say, look like we have this data. We know we have a problem, but it's really hard to figure out how to use that data to prove what we've done. Has the industry kind of developed a metric or some way to help them move that forward? So we've actually, at Carlyle, been working on something over the past year, a year and a half exactly on this topic. I think one thing people love to talk about in this field is the idea of greenwashing. I think it's because it's a really cool term that sparks your imagination. I think greenwashing is basically, you know, purporting to do great things in the universe. And not actually doing that much. It's simplest, and I think greenwashing happens when you each write your own report card. And unfortunately, because we have a lot of dispersion in the field and there isn't one standard or regulatory body, we've all kind of been free to write report cards that we want to. And you're able to combat that when we have one report card and we're all being held to the same standards. And unfortunately, in New Zealand of a side effect of this great enthusiasm and energy and focus on the field is that there has been a proliferation of standards and frameworks. I was talking to one of our investors, calpers, the California Public pension plan, one of the two about a year and a half ago. And it was really the kickoff of this work and trading notes. And he said, when you talk to a company and they want to do sustainability reporting, what framework do you tell them to use? And my honest answer was, start with your I And then you do SASB. And probably when you need TCFD and probably CDP in the u.s., FDR is coming around the corner and you have to make sure the taxonomies a lot. And that was our best answer to them. And it was true, because these frameworks have different stakeholders and different reasons, and your public shareholders are suppliers. And the reality is like, we all have the same end goal. We want a smaller set of more useful performance based ESG data points to look at across companies to see relative performance change over time. It's not rocket science, but it requires coordination in a field that hasn't always done that, that well. So we basically lacked a group of private equity firms in a Zoom room for about nine months, and we just tried to negotiate and collaborate and say, all right, you measure greenhouse gas emissions this way. We measure it this way. Can we agree on doing it this way altogether? And at the end of that, we basically came down and said, here are kind of six categories of metrics that we all agree are important across industries, and companies were important for some versus others. But we all agree we want this broad based information. We're all going to use the exact same definition to track things like greenhouse gas emissions, renewable energy purchasing, forward diversity, employee engagement. We're going to track that the same way across our companies and report that to is the same way. And in September of 2020, when we kind of went out to the world and said, hey, here's what we're thinking. Here's why we're here. This is not a panacea for ESG data, but like if you're interested, come with us. And the crazy thing is, we called it the ESG Data Convergence project, which is exactly what it sounds like. And the wild thing is never a couple of months past that we've had North of 140 private equity general partners and limited partners. Investors sign on to say, like, we're going, this isn't solving all of our problems that we need to start having a common language to talk about this. And so I think a lot of efforts happening. But I think this idea of a common language, a course of things that we can all be looking at. There will always be data points that are more relevant to your specific company and its context. It's business, but how do we kind of broadly show alignment with these macro themes that are impacting all companies and all geographies? Yeah, that's great. I mean, I think it's just kind of the natural progression of any sort of nascent industry. We're in the beginning, you're going to have a bunch of different competing standards and everyone wants to have their standard out there and the different nations and political groups and everything have their standards. And then kind of converges down. I mean, do you see that happening in the future? A lot of these kind of slimming down and reaching kind more of a unified core set of metrics? Yeah, I think we've seen a lot of really incredible work around that idea of convergence and collaboration. There's a group called isby International Sustainability Standards Board. It recently came together. They've done a phenomenal job of getting a bunch of these underlying frameworks to say, you know what, we've got to band together, we're going to do this well. And so I'm really heartened by what we're seeing in the field. And I think to your point, a certain amount of dispersion is natural. That's a sign that the field is growing and expanding, and there are a lot of smart minds focused on it. And the idea is like what companies were able to parse through that, what frameworks were really able to emerge as saying, like, you know, this data is really useful. Stakeholders value it. And so companies are then going to devote the resources and focus actually getting that data well, because data can take a lot of. Elbow grease to actually collect greenhouse gas data is a great example, and I know you deal with this all the time, but our European buyout fund, for example, invest in the largest and most sophisticated on ESG companies in Europe in 2018. Less than 35% of our majority owned companies and that fund had any idea what their carbon footprint was. So you can't work on decarbonization. We don't have the baseline data, but it took Carlyle use and I was dozens of hours with each company to go through that carbon therapy conversation. Do you have a fleet of trucks? If so, what type of fuel do they use? Can you track down the person who has a fuel bill so we can convert that into greenhouse gas emissions? But like the digging through the understanding, the scope, the figuring out how you build that internal muscle around reporting that takes time to set up, it's easier once you have it. But that's a real discovery process and it and it takes a good amount of work to get that baseline in place. It's worth doing, though, because once you have that baseline, then the rest of the data flows from there. If you extrapolate out, say, five 10 years based on where we're at right now, kind of what is the landscape look like to you in that time frame? well, I think that we're never going to reach ESG nirvana as much as we might like to think we might. Exactly at that point, I referenced earlier of dynamic materiality. As issues become better understood, they get priced in, management teams get really excellent at them and it becomes standard operating procedure. But the next issue is coming right down the fairway. We've seen this with a lot of recent work and talk around biodiversity. We've been really focused as a globe on climate change, necessarily. But now all of a sudden, we're thinking about next order ramifications around things like biodiversity, loss of habitats and how companies are playing into that, where that might impact their business. And so I think five, 10 years down the line, I think we're going to really understand the implications of climate change on business. And I think we're going to have a much better market view of companies that are approaching that well and companies that are behind the ball. I think we're getting a lot better as a global economy and diversity. It's a lot of progress to go, but I think we're going to have a much better understanding of what tools work, what data is effective and how we can maximize that performance. But but I think as we continue to look forward, what I'm excited about is that it never stops and I mean that in a good way. And so I think we're bringing in New data, new insights, things that climate scientists, there are all these different sorts of alternative data. They're helping us better understand things like rainfall patterns and precipitation and migratory flows. And so I'm excited for us to continue bringing tools like, you know, digital transformation to things like how do you think about optimizing the energy use of different corporations? And so I see a lot of melding of different disciplines, but a continual focus on what topic is coming next at management teams that they really have to be on the ball for. That's great. All right. I'll open it up to you. Do you have any questions for me about Honeywell or anything else you want to dig into more? So I think if I think of like one word to describe most of the conversations we have with management teams when like ESG comes up, we come in the room where they sit down with them. The question is basically like help and sometimes like that is as much specificity as there is. And so I'm curious when you're talking to clients, what is it that they're asking for help on what parts of ESG land are cacophonous or confusing? Or are they really having kind of business struggles? And yeah, I think I think it comes down to one simple thing that is a very complex problem, which is data. And our whole digital transformation software effort is predicated on the fact that if you think about a modern industrial site or even a portfolio of sites, everyone is kind of a unique snowflake. They have all these different interacting systems. They were all built at different times. And so it's very hard for them to compare apples to apples. And if you have this, say, corporate real estate, for example, you've got this building that was built in the 60s is built like a bomb shelter. It has all these different kind of aspects to it. And then you have a more modern LEED silver building that has all these different things on it and makes it really hard for them to compare their data. So what we hear is, hey, look, we know we need to be doing more around ESG or hey, we know that we have to meet these regulations or these compliance aspects from our communities, our governments, investors, whatever, but we don't know how to get at the data. We need help taking all these disparate systems and tying them together into a unified whole. So that what we all kind of have a control tower view of the situation because right now they have to pay a lot of consultants to do all that. So you've got your labor system, you've got to pull the data out of that. And then you have your assets out on the shop floor. You've got to pull the data out of that. And so it becomes very laborious for them and requires a lot of manual data engineering that has to happen. And oftentimes they can't do that to speed a business by the time their consultants have poured through the data and normalized it and tied it all together. It's often too late to use it. So the main thing they come to us with is help us tie all this data together so that we can honestly, truly answer these questions because we don't want to greenwash. But right now, we're just not in a position to adequately answer these questions and put hard data behind it. Because now this shift that they've seen is that their investors aren't just saying you need to be more ESG compliant, they're saying, we want you to cut your carbon emissions by 20% in the next three years. And they're like, Ah, how do we do that? Yep, that makes total sense. I think the data is the crux of it, and without it, you don't even know what you don't know. And to your point, that means you can't actually enact kind of progress on anything if you don't know where you're starting from. That's right. And that's kind of one of the things that we've seen driving digital transformation efforts is that need and that ability to get at that data in a near real time way so that they can use that to make decisions both on their operations but also on the ESG. And you know, in a lot of companies, especially heavy industrial companies, those two things are intricately linked because if your assets are working better and you have more uptime and they're working more optimally, then they use less energy, they create less waste. They, you know, there's all these other kind of side benefits that go along with that. So they kind of view, they're starting to anyway view that as not only an operational benefit where they can cut their costs, but also as an ESG benefit. And those two things combined can really help them move the needle on both fronts because their expectations around production, their expectations around what they're delivering for their clients haven't changed. In fact, if anything, they've accelerated, but those same clients are saying. But along with that increased production, you also have to be greener and meaner and leaner. And so we want you to do both, and it puts them in it can put them in a spot where they've got to kind of take a step back and say, how do we do this? Yeah, Yeah. It's that idea of how do you further incentivize that convergence between profitability and progress? You have to find where they're converging, not diverging. Otherwise they're operating in tension with each other. Right and, you know, without analytics, so many of heavy industry, even corporate real estate, you know, a lot of that equipment is still very old school in the way that it operates. So you can have situations where you literally have to wait for somebody to catch on fire before it's not working optimally. And now using AI and machine learning and analytics, we can look at a pump at an oil refinery and say, hey, it's not. It's starting to work outside of certain parameters and you can fix that in real time. And that means you're getting better quality material out of the refinery. It means that your buildings are using less energy. And so it's really kind of something that's driving them to do more, especially on the building's front. I mean, if you look at buildings, take depending on who you believe. Somewhere between 20% and 30% of the world's carbon emissions come from buildings. And so there's a big shift of, hey, we can really move the needle on the ESG strategy just by fixing our buildings. Help us help us with this. And then, like you said, you can't do everything at once. So we want to look at, OK, let's start with your building. Let's get that going. And then maybe we could look at your assets in your operations and really intricately tying their operations to their ESG strategy and not having the ESG people just kind of be this thing that's over operations making their life difficult. It's really kind of a symbiotic relationship. All right. We we work with some companies that make climate commitments, and we'll sit down with the ESG team and be working through them and we'll say great. So it's one of the first things like let's think about reducing your energy use and then switching your energy sources and was a great tool that we talked about switching to energy sources. And it turns out it's a procurement team that is totally separate from the ESG team has ever interacted before, and they've already locked in long term offtake agreements. I think exactly that idea of the strategy needs to be kind of coherent and put together. It can't be a separate team that's trying to do it. It's part of all of these kind of core functional areas for business. Yeah and you know, I think that goes all the way up to the c-suite. I think along with the fact that ESG is not just a department anymore. I think in much the same way that CEOs had to get very savvy about it and had to get very savvy about marketing technology. And you see a lot of CEOs that now formerly were CMOs or CEOs or. Ctos now, instead of just raw business folks, I can envision a world where even every CEO has to have a pretty firm understanding of ESG commitments of what that means, both from an investor perspective. And for their board and otherwise. I mean, do you see that trend continuing? Yeah, I would say it's exactly to your point, if you are a CEO in today's rapidly changing world, we kind of think of ESG competencies as a proxy for management excellence. Are indicative of management teams that are forward thinking that are agile, that can rapidly adapt to disruptions. I think we saw that during the early days of code. There was a massive, massive disruption in the world and management teams that were quick on their feet. They were thinking about resilience. They were thinking about how we take care of our people and really kind of have a holistic view of this issue. They were well positioned to come out of it, and I think there are other analogies to exogenous shocks, such as the physical risk of climate change that I think management teams that are really thoughtful about having the right data at their fingertips, having a good understanding of how these issues are impacting their business. That's just good business planning and good management for the future. And there's one thing that you just said that I want to dive into for a second. I had a chat with our chief sustainability officer, Evan van hook, who I'm sure you've heard of. If not, no. And whatever we'll say to you is something that often gets overlooked is that there are security implications to this. We had a chat with Evan and Janet Napolitano on not too long ago. And for her, she, you know, she said that like that was her primary focus with ESG stuff is that it provides climate change, actually provides an extreme security risk for a lot of businesses and governments. And so adding that element to it, it becomes all that more important. Do you see a lot of companies starting to think about things in terms of that as well, the security implications of the impact of esg? Totally and I think sometimes it's not always labeled as ESG, and that's actually totally fine. A lot of CTOs or CIOs have started doing kind of disaster recovery planning and actually we're rooming out what would happen if data centers got taken offline by extreme weather related event? And that's building and resiliency of your business. And a lot of times it's things like climate change, extreme weather related events that could be those large disruptions about Hurricane Sandy knocking out power for so much, Manhattan for so many days. And so I think a lot of these things in terms of business continuity, resilience, ability to adapt, handling exogenous shocks, a lot of those external forces can be exacerbated by these kind of global sustainability things. And I think building in your ability to not just mitigate them but also react to them in a resilient and adaptive way, it's great for the agile business leadership. It's really critical in terms of how you think about mitigating ESG issues that you can't always predict. It's great. So, Megan, tell me a little bit. Just in general, what does Carlyle do as a private equity firm? So Carlyle is a global investment firm. We have about $300 billion in assets under management. We have a couple of different investment strategies in private equity. We invest in companies for a number of years and hope to improve them over our whole period. That's of a private credit platform which lends to companies and a few other capabilities. Fundamentally, what my team is focused on is how do we integrate environmental, social, and governance considerations across our investment lifecycle because we fundamentally believe it will help build better businesses. And the moral of the story is those businesses are worth more in today's changing markets. And so everything from how we diligence investments and understand things like their health and safety track record environmental liabilities, how diverse, inclusive their teams are through value creation, how do we help them pursue sustainability growth strategies, build out ESG reporting, prepare them to exit into an IPO market that might give a higher multiple to companies that have strong sustainability credentials across that full lifecycle. We are really focused on embedding these considerations because in a really rapidly changing world, we've seen them as pretty critical to business success. It's great. This is a fun chat. Thank you so much for giving us your time. I know you're very busy, so enjoy the beautiful New York spring and thank you so much for your time. Awesome talk to you guys soon. All right. Take care. Bye this has been forging connections, a podcast from Honeywell. You can follow Honeywell forge on LinkedIn and download new episodes from our website. 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