Community Engagement

Corporate Social Responsibility: Doing Well by Doing Good

We strongly believe that responsible corporate citizenship is fundamental to the private equity industry’s growth and sustainability. The freedom to operate in a global economy and to make profits entails an opportunity and a responsibility to be socially engaged. We also believe that private equity activity has a number of public benefits, such as building stronger and more competitive companies, creating employment opportunities, investing in R&D and growing economic value in its broadest sense.

Accordingly, we strive to establish and implement socially responsible policies and best practices for our portfolio companies. The following are a few highlights of the social value created by our portfolio companies:

Dollar General is a distributor of everyday items, including basic consumable merchandise and other home, apparel and seasonal products, with more than 8,000 stores in 35 states. Dollar General is committed to providing safe products for customers and has proactively addressed the issue of lead-tainted toys head-on by implementing new testing requirements, which in some respects, are more stringent than the Consumer Product Safety Commission standards. Dollar General also increased the frequency of sampling and testing on a random basis. If a product fails lead standards, the order for that product is permanently cancelled. The vendor may not remedy the product and present it for re-testing.
Jazz Pharmaceuticals is a pharmaceutical company focused on the identification, development and commercialization of pharmaceuticals in focused therapeutic areas, initially in neurology and psychiatry. Jazz has been a private equity success story, growing from 6 employees when KKR invested in Jazz to nearly 200 today. Among other things, Jazz develops “orphan” drugs for the treatment of rare diseases that may not otherwise be developed because of the prohibitive costs inherent in the R&D process. In 2006, Jazz was also instrumental in a national emergency in Nicaragua when hundreds of people had consumed methanol, a dangerous toxin. In that case, Jazz provided the country with 1,200 free vials of the antidote valued at approximately $1,500 per dose.
Toys “R” Us is a global leading specialty toy and children's products retailer, selling merchandise through a worldwide network of stores as well as online. The company has been proactive in promoting toy safety, including by issuing industry-leading requirements to toy manufacturers on safety and testing standards. Toys “R” Us has enhanced high-quality assurances standards and established a detailed recall notice system, additional testing requirements for manufacturers and a zero-tolerance policy for potentially unsafe products. Toys “R” Us has also collaborated with federal legislators in the United States to advocate for more funding for the government regulator responsible for toys.

Going Green

As a member of the global business community, we take our responsibility to the environment seriously and seek to adopt and implement environmentally sound policies in our portfolio companies and internal operations.

Green Portfolio Project

Recently, we proudly partnered with the Environmental Defense Fund (EDF) to form a “Green Portfolio” to measure and improve the efficiency and environmental performance of our U.S. portfolio, similar to the way KKR drives financial improvement. This groundbreaking new initiative marks the first time the EDF has partnered with a private equity firm to address today’s important environmental issues.

As partners, EDF and KKR will collaborate with the management of our portfolio companies to develop a set of analytic tools by which companies can assess and track improvements on a series of environmental metrics. These tools will enable managers to cost-effectively improve efficiency, reduce waste and address environmental impacts, such as greenhouse gas emissions, the use of toxic substances, water consumption or waste generation. Our hope is that the knowledge and tools developed in this process will be replicated and implemented across our portfolio and serve as an example for other businesses worldwide.

Other Environmental Achievements

Examples of recent environmental achievements by our portfolio companies include the following:

Energy Future Holdings (EFH), formerly TXU Corp., is one of the largest power companies in the United States. The buyout of EFH in 2007 was officially endorsed by many respected environmental and labor organizations including the EDF, the Natural Resources Defense Council (NRDC) and the Texas AFL-CIO, for our commitment to climate change. We recently announced that EFH would reduce the number of planned coal fired power plants, limit the company’s emissions of pollutants and lower rates for customers. For our cooperation with EDF and NRDC, we were recently honored with the 10th Annual Bridge Builders Award. Notably, the Chairman Emeritus of the World Wildlife Fund and former Administrator of the U.S. Environmental Protection Agency (EPA) now sits as a director of EFH leading an effort to make climate stewardship central to corporate policies. EFH has also established a Sustainable Energy Advisory Board that will help determine the best technologies to employ to meet the future energy demands of the state of Texas and its residents going forward.
Rockwood Holdings is a global specialty chemicals and advanced materials company. Rockwood is committed to the establishment of environmental management systems that effectively manage potential impacts from manufacturing, storage, distribution and disposal activities and that provide energy conservation, waste minimization and recycling opportunities. Rockwood voluntarily cooperates with government agencies to ensure environmentally sound manufacturing processes. For example, when the pesticides manufacturing industry started to phase out the use of chromated copper arsenate, the EPA praised Rockwood for developing a safer alternative: alkaline copper quat.

Economic Contribution to the United Kingdom

The UK has long been a significant focus of our business and we are proud to have contributed to the private equity industry’s positive impact on the UK economy. A recent study by the BVCA shows that in the United Kingdom:

The UK private equity industry has invested over £80 billion (over £60 billion in the UK) in around 29,500 companies since 1983.
In the five years up to fiscal 2007, investment in private equity-backed businesses has grown much faster than the national average, rising by 11% compared with a national increase of 3%.
In the five years up to fiscal 2007, private equity-backed companies increased pending on R&D by 14% a year, compared with a national increase of 1%.
The UK private equity industry is the largest and most dynamic in Europe, contributing significantly to the financial services industry and helping keep London a leading global financial center.
In the five years up to fiscal 2007, sales in private equity-backed companies rose by 8% a year compared with 6% in FTSE 100 companies and 5% in FTSE 250 companies.
In the five years up to fiscal 2007, exports in private equity backed companies increased by 10% a year compared with a national increase of 4%.
Private equity-backed companies employ more than one million people, accounting for approximately a fifth of UK private sector employees.
In fiscal 2007, private equity-backed companies stimulated the UK economy by contributing nearly £35 billion in taxes.