We work to understand the impacts of the companies in which we invest and believe that our understanding of ESG issues improves our opportunities to create shared value. In line with this belief, we have made a public commitment to formally incorporate the consideration of ESG factors into our investment processes.
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 our own guidelines and the PRI, KKR believes we should seek to act in the best long-term interests of our beneficiaries. We also recognize 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 for PRI principles for our private equity investments:
- We will incorporate ESG issues into investment analysis and decision-making processes.
- We will be active owners and incorporate ESG issues into our ownership policies and practices.
- We will seek appropriate disclosure on ESG issues by the entities in which we invest.
- We will promote acceptance and implementation of the Principles within the investment industry.
- We will work together to enhance our effectiveness in implementing the Principles.
- We will each report on our activities and progress towards implementing the Principles.
Private Equity Growth Capital Council (PEGCC) Guidelines
At KKR, we are committed to thoughtfully considering ESG issues as they pertain to our private equity investments. For us, this approach means more than just responsible investing; it means smart investing.
As part of our commitment to this investment approach, KKR worked with other members of Private Equity Growth Capital Council (PEGCC) to develop Guidelines for Responsible Investment in 2009. These guidelines serve as a platform for formalizing and focusing our responsible investment efforts — and those of our peers in the private equity industry. In accordance with these guidelines, KKR’s private equity funds commit to take environmental, social, governance, and labor issues into account when making and managing investments:
- 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.
- Seek to be accessible to, and engage with, relevant stakeholders either directly or through representatives of portfolio companies, as appropriate.
- 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, Private Equity Growth Capital Council members 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.
- 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.
- 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.
- 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.
- 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.
- Provide timely information to their limited partners on the matters addressed herein, and work to foster transparency about their activities.
- Encourage their portfolio companies to advance these same principles in a way which is consistent with their fiduciary duties.