Harvard in Tech Spotlight: Megan Starr, Global Head of Impact at The Carlyle Group
I spoke with Megan Starr, Global Head of Impact at The Carlyle Group. Megan grew up on Cape Cod with a very sustainability-oriented family. She was exposed to technologies like solar panels and the realities of environmental issues such as climate change from a young age. Megan further cultivated her interest in the environment through studying environmental science and public policy (ESPP) at Harvard. She loved the concentration because it was so interdisciplinary, cutting across fields such as chemistry, geology, economics, and more. At Harvard, she pursued thesis research on carbon offsets, interned with nonprofit organizations including the Alliance for Climate Protection where she worked on climate legislation, and studied abroad in the Turks and Caicos to research coral reef health.
After graduation, Megan joined a private family foundation, The JPB Foundation, which focused on a wide variety of areas from medical research to poverty. The Foundation leadership realized, however, that most areas they were focused on were impacted or exacerbated by climate change. As a result, Megan spent a lot of her time there focused on climate change and environmental justice-oriented philanthropy.
Through this experience, Megan became interested in the different tools across the capital spectrum that could be leveraged to create a more sustainable future. Megan went to Stanford’s Graduate School of Business where she dove more into impact investing and joined Goldman Sachs to help build their Environmental, Social, and Corporate Governance (ESG) and Impact Investing group after graduation.
After 5 years at Goldman Sachs, Megan left to join The Carlyle Group where she is now their Global Head of Impact, leading the firm’s impact strategy and dedicated ESG team.
Megan shared her perspective on impact investing, building agile teams, continuous learning, and sharing gratitude.
On mental models for impact investing, Megan notes that ESG and impact investing were contrarian ideas in the early days. Many people felt that a focus on environmental or social issues in investing was solely about morals or values, and consequently wrote it off the field when evaluating companies for investment. However, overtime investors have realized that a wide array factors go into the success or failure of a business, including factors like climate resilience and the diversity of teams. In this way, ESG can be an underutilized lens through which to identify value in business.
Now, as markets increasingly price in companies’ competencies across ESG factors, there may be a new contrarian play. Specifically, there is now potentially an opportunity to identify companies that are underperforming across certain ESG dimensions — an investment thesis that drives significant improvement across material ESG practices could consequently create significant financial value alongside environmental and social impact. Perhaps impact is no longer a “product,” but rather a process that involves change driven by active investing over time.
On staying agile as a company, Megan underscores the value of intentional exercises to build cross-functional competencies on impact themes. While Carlyle has a dedicated team focused on ESG and impact through Megan’s group, they work to integrate impact-oriented thinking throughout the company. As an example, last summer Carlyle brought together 25 people across the company from different asset classes and geographies for a climate scenario analysis workshop to brainstorm and better understand how their respective portfolios would perform under three different climate scenarios. Through this exercise, investors outside of the ESG and impact were encouraged to start thinking more intentionally about how climate change — and its attendant risks and opportunities — could impact their own work. Exercises such as these help to build agility and generate creative approaches to value-creation throughout the organization.
On continuous learning, Megan highlights that she loves ESG issues for this very reason: they are so cross functional, touching topics from climate change to human capital and much more. ESG issues are never fixed — they are incredibly dynamic, so you never reach “ESG nirvana” and are done with the topic.
To constantly stay updated, Megan sets Google Alerts for topics of particular interest and regularly reads Bloomberg Green and Responsible Investor, alongside traditional investment publications. More importantly, she finds talking to people from diverse backgrounds to be incredibly valuable for learning. Recently, she did a deep dive on geospatial technologies to better predict flood risk with scientists and found their unique perspective highly valuable for how her team could think about the physical risks from climate change in certain investments.
On advice for her younger self, Megan notes the importance of always letting people know when you are grateful for something they have done. Expressing gratitude, appreciation, and positive feedback is all too rare but so important.
