Since 2009, KKR has had a formal commitment to operate in a way that considers environmental, social, and governance (ESG) factors. In a time when consumers want to see corporations with a heart, this is more important than ever. KKR was one of the first private equity firms that switched over to and signed the Principles for Responsible Investment, and has since become even more invested in its ESG programs.
Perhaps one of its best know programs is the Green Portfolio Program (GPP), which works with KKR’s portfolio companies on being more environmentally efficient and sustainable. Within just a few years of operation, KKR has managed to save hundreds of millions of dollars, and has significantly reduced CO2 emissions, waste, and water usage. KKR’s Responsible Sourcing Initiative is another ESG program that has helped ensure that its portfolio companies are ethical in their management and operations globally.
“We partner with our investors and portfolio companies to integrate ESG-related goals and initiatives into operations, focusing together on long-term results and value creation,” says Ken Mehlman, KKR’s head of global public affairs. “To us, responsible investment is all about shared value – value for our investors, our portfolio companies, and the communities where we all live and work.”
Addressing ESG issues is one of the first things KKR takes into consideration when looking into potential investments. And investors are backing KKR’s efforts at ESG responsibility. It is now one of the leading private equity firms when it comes to corporate social responsibility. And one of the greatest parts of all this is that KKR is very open to sharing its practices with other private equity companies. It’s not something they’re struggling to retain ownership of; standing by ESG principles isn’t about being competitive, it’s about making the world a better place.
One of the challenges KKR is still working on is how to implement their ESG programs on a global scale and across a multitude of cultures and regulations. They’ve learned that early implementation is even more important in their international companies.
“When such analysis begins earlier, you are better able to conduct top-line assessments and thereby puck up any potential ESG obstacles early in the investment cycle,” says Ludo Bammens, KKR’s European corporate affairs director. “It creates a fantastic learning platform.”
“It enables you to really build on internal expertise because over time the same sectors, the same type of companies, and eventually the same issues come back and you therefore become more sophisticated in the way you look at these investments,” he says. KKR’s looking to the future, and expects that it will continue to learn and grow, constantly finding new ways to best nurture its foundational values.