While many of our portfolio companies face unique sustainability challenges or opportunities — just as they face unique operational or financial issues — some issues do span multiple sectors. When there are common issues, we see a particular opportunity to build “communities of best practice” on shared challenges and to learn from the expertise within our own portfolio. Some of our most effective thinking on these issues has come from our portfolio companies, many of which were leaders on sustainability issues before we made investments and from which we and other companies are able to learn.
Partnering for a Greener Portfolio
In May 2008, KKR launched the Green Portfolio Program (GPP) in partnership with Environmental Defense Fund (EDF) — a leading nonprofit organization with more than 700,000 members worldwide. The GPP is an operational improvement program that uses an “environmental lens” to assess critical business activities for KKR’s participating private equity portfolio companies.
At KKR, “green” is not just about the environment; we also see it as another way to build value. Because the use of resources can be expensive, we believe companies that strategically measure and manage their environmental impacts, and commit to strategies to reduce them, will experience various benefits. In addition to better environmental performance, these efforts can simultaneously reduce costs and create more productive workplaces, while also allowing companies to develop stronger relationships with suppliers and customers, launch new products and services, and build competitive advantages.
In its third year, the KKR Green Portfolio Program continues to deliver a financial and environmental impact. In 2011, KKR’s GPP reported results for the third time.1 Since the program’s inception in 2008, 13 companies have reported results2 with their reported efforts leading to the following estimated cumulative results:
- Achieved a financial impact of more than $365 Million
- Avoided 810,000 Metric Tons of GHG Emissions
- Avoided 2.2 Million Tons of Waste
- Recycled more than 462,000 Million Tons of Waste
- Avoided 300 Million Liters of Water Use
As of May 2012, 23 private equity portfolio companies are participating publicly in the program. Additional details on the Green Portfolio Program and specific company initiatives can be found at http://green.kkr.com.
Partnering For Social Value in the Portfolio: Responsible Sourcing
With increasingly complex global supply chains, it can be challenging for companies to ensure that their expectations for sustainability performance, and those of their customers, are met by suppliers in distant locations. In addition to having potentially unacceptable human rights or environmental consequences, suppliers’ failure to achieve these expectations can result in operational risks that affect product reliability or consumer behavior. This is why, in 2010, we launched an initiative to provide our private equity portfolio companies with guidance and resources focused on the continuous improvement of their management of human rights and environmental issues in global supply chains.
To enhance our efforts, we partnered with Business for Social Responsibility (BSR), a nonprofit organization with a global network of nearly 300 member companies, to create a series of tools, events, and other resources for our portfolio companies.
Partnering For Social Value in the Portfolio: Employee Health and Wellness
Healthy, engaged workers not only help build better, stronger companies, but also benefit the communities in which they live. A number of our private equity portfolio companies are developing innovative efforts to promote employee wellness and proactive health management — practices that we are committed to sharing across our portfolio.
In 2011, we launched the KKR Workplace Wellness Program at six U.S. private equity portfolio companies. The wellness program is designed to provide a road map for driving significant improvement in employee health and wellness. It is based on a five-part approach that companies can customize to their needs. Companies enrolled in the wellness program are provided with guidance and resources as they implement best practices that drive employee wellness.
- In this presentation, the reported impact of initiatives of the Green Portfolio Program is based on internal analysis of KKR and/or KKR Capstone and information provided by the applicable portfolio company. Impacts of such initiatives are estimates that have not been verified by a third party and are not necessarily reported according to established voluntary standards or protocols. They may also reflect the influence of external factors, such as macroeconomic or industry trends. For more information on the methodology and terms used in the Green Portfolio Program, please see http://green.kkr.com.
- Thirteen of the KKR portfolio companies participating in the Green Portfolio Program in 2011 reported results. Reporting for the first time in 2011 are: A.T.U., First Data, Oriental Brewery, Pets at Home, Tarkett and WILD Flavors. The U.S.-based companies already participating in the program are: Accellent, Biomet Dollar General. HCA. Sealy. SunGard. and US Foods. A.T.U .. based in Germany, joined the program in 2011. Three other companies joined the GPP in 2010 and will report results in 2012: Bis Industries Limited, located in Australia; Van Gansewinkel Groep, located in the Netherlands; and Visant Corporation, located in New York.