Because we believe that considering environmental, social, and governance (ESG) factors is critical to our long-term private equity investment success, we have made a public commitment to formally incorporate ESG issues into our decision-making and ownership practices.

In 2009 we became signatories of the globally recognized voluntary framework of the United Nations-backed Principles for Responsible Investment (PRI), and helped lead the development of the Private Equity Growth Capital Council’s (PEGCC) Guidelines on Responsible Investment. These principles and guidelines serve as valuable platforms for formalizing and focusing our responsible investment efforts, raising internal awareness, and providing a common language and set of expectations for our investment partners, our portfolio company management teams, and other stakeholders. Just as importantly, we see the value of interacting with and learning from others who share this commitment. Therefore, we work regularly with our peers in these communities to help develop tools and resources and to learn from each other.

Principles for Responsible Investment

In accordance with the Principles for Responsible Investing, KKR’s private equity funds recognize our duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that ESG issues can affect the performance of investment portfolios to varying degrees across companies, sectors, and regions and through time. Therefore, where consistent with our fiduciary responsibilities, we commit to the following PRI principles for our private equity investments:

1. We will incorporate ESG issues into investment analysis and decision-making processes.
2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
4. We will promote acceptance and implementation of the Principles within the investment industry.
5. We will work together to enhance our effectiveness in implementing the Principles.
6. We will each report on our activities and progress towards implementing the Principles.

Our Guidelines

More than three decades of private equity investing have taught us that value creation, which comes through building better companies, often requires active engagement with key stakeholders on critical environmental, social, and governance issues. Around the world, companies are being held to a different and more rigorous set of standards by investors, customers, nongovernmental organizations, activists, employees, and governments. Therefore, in today’s turbulent economic environment, coupled with the explosive growth of instant global communications, effective ESG management and stakeholder engagement are more important than ever.

In 2009, we helped draft and adopted the Private Equity Growth Capital Council Guidelines on Responsible Investment. In accordance with these guidelines, KKR’s private equity funds will seek to:

1. Consider environmental, public health, safety, and social issues associated with target companies when evaluating whether to invest in a particular company or entity, as well as during the period of ownership.
2. Seek to be accessible to, and engage with, relevant stakeholders either directly or through representatives of portfolio companies, as appropriate.
3. Seek to grow and improve the companies in which they invest for long-term sustainability and to benefit multiple stakeholders, including on environmental, social and governance issues. To that end, we will work through appropriate governance structures (e.g., board of directors) with portfolio companies with respect to environmental, public health, safety and social issues, with the goal of improving performance and minimizing adverse impacts in these areas.
4. Seek to use governance structures that provide appropriate levels of oversight in the areas of audit, risk management and potential conflicts of interest and to implement compensation and other policies that align the interests of owners and management.
5. Remain committed to compliance with applicable national, state and local labor laws in the countries in which they invest; support the payment of competitive wages and benefits to employees; provide a safe and healthy workplace in conformance with national and local law; and, consistent with applicable law, respect the rights of employees to decide whether or not to join a union and engage in collective bargaining.
6. Maintain strict policies that prohibit bribery and other improper payments to public officials consistent with the U.S. Foreign Corrupt Practices Act, similar laws in other countries, and the OECD Anti-Bribery Convention.
7. Respect the human rights of those affected by their investment activities and seek to confirm that their investments do not flow to companies that utilize child or forced labor or maintain discriminatory policies.
8. Provide timely information to their limited partners on the matters addressed herein, and work to foster transparency about their activities.
9. Encourage their portfolio companies to advance these same principles in a way which is consistent with their fiduciary duties.