Environmental, Social, Governance Overview

Partnering with the Portfolio on ESG Issues During Stewardship (cont.)

A Greener Portfolio - In 2008, KKR and the Environmental Defense Fund launched the Green Portfolio Program, which today helps drive innovation and business improvements at 16 companies globally.

These companies have already produced significant results on many fronts. In 2010, eight Green Portfolio Program companies avoided an estimated $160 million in costs by collectively:

Avoiding 345,000 metric tons of greenhouse emissions, producing 1.2 million tons of greenhouse gas emission, reducing paper use by 8,500 tons.

Visit http://green.kkr.com for more information.

Engaging Employees - Building better, stronger companies creates jobs and opportunities for workers and economic growth for the communities in which those companies operate. The companies in which we are invested today employ hundreds of thousands of people around the world. We are very pleased that in 2010, notwithstanding a very volatile and challenging environment, our private equity portfolio grew and many of our portfolio companies added new jobs.

One critical component of achieving sustainable growth is effective, collaborative relationships between company management and employees. Therefore, we carefully assess the relationship between workers and management, including, where relevant, organized labor and work councils, before we make new private equity investments. We encourage and support our portfolio companies on maintaining constructive dialogue throughout our investment period. In addition, we strive to work with management to identify opportunities to improve employee engagement and productivity where possible.

We see an opportunity to expand our efforts on employee engagement and to share best practices across the portfolio. Therefore, in 2011, we will continue to develop opportunities to partner with company management teams on employee engagement, with a particular focus on issues and shared solutions related to health and wellness.

Responsible Sourcing - In today’s global economy, it can be increasingly challenging for companies to ensure that their — and their customers’ — expectations for sustainability performance are met by their suppliers in distant geographies. Suppliers’ failure to achieve these expectations can result in unacceptable human impacts and operational risks.

Recognizing that we have a unique opportunity to partner with our portfolio companies on this issue, in 2010, we launched our Responsible Sourcing Initiative to work with our portfolio companies to develop effective tools to address this shared challenge. To enhance this effort, we partnered with Business for Social Responsibility, a leading nonprofit organization that works with a network of more than 250 global organizations to develop sustainable business strategies and solutions and has particular expertise in facilitating supply chain sustainability programs.

Transparency and Engagement

We participate in thoughtful constructive dialogue with the many individuals, investors, organizations and community groups affecting and affected by our business decisions. By doing so, we can better ensure that our approach is sound and informed by a broad range of insights and experiences.

As part of this, we have completed our first-ever sustainability report, which is excerpted here. We look forward to your feedback on this inaugural effort.