By Ken Mehlman, Robert W. Antablin Sep 24, 2019
It is inspiring to see so many government, business and nonprofit leaders come together this week for the United Nations General Assembly and Climate Week NYC to discuss how best to address some of the greatest challenges of our time.
These gatherings and others like it (PRI in Person, GIIN Investor Forum, Climate Strike, etc.) offer a prime example of the kind of entrepreneurial spirit and collaborative effort that is necessary to create long-lasting change. However, if there is one theme that has emerged from all these events and conversations, it is this: now is the time to translate words into action.
At KKR, we take this responsibility to catalyze change seriously. In late 2017, we set out to create an impact investing strategy that built on our decade of responsible investing experience. The result of this effort was KKR Global Impact, which focuses on identifying and investing in companies whose core business models provide commercial solutions that measurably contribute toward one or more of the UN Sustainable Development Goals (SDGs).
Our work is just beginning, but we are proud of our start. Here is a closer look at some of our recent impact investments that show how we are making meaningful progress towards tackling many of today’s greatest sustainability challenges.
Burning Glass Technologies - SDGs #4 (Quality Education) and #8 (Decent Work and Economic Growth)
Earlier this month, we announced the acquisition of a majority stake in Boston-based Burning Glass Technologies. Burning Glass uses a sophisticated data engine to analyze the labor market and predict the jobs and skills that workers will need in the future. Institutions, enterprises and government agencies all rely on Burning Glass’ database of more than 1 billion current and historical job openings to better understand the changing nature of skills in the job market.
There is no doubt that the labor market is changing dramatically, with the 4th industrial revolution now rapidly disrupting workers and industries around the world. A November 2017 report from McKinsey found that about half of all current work activities are potentially automatable, and that as many as 800 million people could be displaced from their jobs as a result of automation by 2030. It is clear that the future of work will need to be defined by lifelong learning and training, and we believe Burning Glass can be an integral part of that future.
KnowBe4 - SDGs #16 (Peace, Justice and Strong Institutions) and #9 (Industry, Innovation and Infrastructure)
In June 2019, we made a follow-on investment into KnowBe4, a market-leading cybersecurity company that offers one of the world’s largest security awareness training and simulated phishing platforms. Headquartered in Tampa Bay, Florida, and with offices around the world, KnowBe4 is used by more than 25,000 organizations across all industries for a range of cybersecurity needs.
There are now nearly daily headlines about the major cybersecurity attacks aimed at companies, governments and infrastructure systems, all of which have the potential to unsettle economic activity, undermine privacy and disrupt all institutions. Also, these attacks often fund criminal enterprises, terrorist organizations and other rogue actors. But many of them can be stopped. According to the 2018 Verizon Data Breach Investigations Report, more than 90% of cyberattacks involved phishing emails that preyed upon individual workers. By using KnowBe4's platform, companies and government agencies can educate employees and essentially create a human firewall against future attacks.
Ramky Enviro Engineers - SDGs #11 (“Sustainable Cities and Communities”) and #12 (“Responsible Consumption and Production”)
In early 2019, we invested in Ramky Enviro Engineers Limited (“REEL”), an India-based firm that specializes in waste management and treatment. REEL today operates waste treatment facilities in more than 60 locations around the world, including 20 Indian states, and handles upwards of 3.5 million tons of municipal waste and 1 million tons of industrial waste. The company uses a number of systems to monitor all this waste and to minimize environmental harm, effectively creating an end-to-end approach to waste management.
Waste management is a major issue for sprawling metropolises, especially in India, which has 46 cities at a population of 1 million or more. Recent studies have shown that India generates approximately 65 million tons of solid waste annually, but less than 60% of waste is collected. Much of the waste that is collected, whether municipal waste or industrial waste, is left untreated. This waste mismanagement creates ever-growing health, environmental and social risks that threaten the livelihoods of residents and is a key reason why, in 2014, India Prime Minister Narendra Modi announced a collaborative effort called the Swachh Bharat Abhiyan, or “Clean India Mission,” to reduce pollution and improve critical sanitation infrastructure across the country. The challenge is daunting, but with REEL, we can see a path to a cleaner and more sustainable future.
Barghest Building Performance - SDGs #7 (“Affordable and Clean Energy”) and #9 (“Industry, Innovation and Infrastructure”)
Our first impact investment was in Singapore-based Barghest Building Performance (“BBP”), a provider of energy savings solutions to HVAC systems in commercial and industrial buildings, as well as foundries and other industrial operations. One of the reasons we were so excited about this investment is because, as part of our investment due diligence, we discovered that BBP’s proprietary energy efficiency solution has the ability to deliver the same cooling load to sites while consuming up to 40% less energy.
Buildings are one of the biggest sources of greenhouse gas emissions globally. In the U.S. alone, the commercial and residential building sector accounts for an estimated 40% of annual energy consumption, more than any other sector of the economy. The energy needed to power buildings is the single biggest demand driver for fossil fuels since almost every building requires some combination of heating, cooling, lighting and electricity. Therefore, we see a big opportunity for BBP to significantly cut into these emissions in buildings around the world.
Each of these companies is directly involved in tackling different sustainability challenges. By putting our financial and intellectual resources behind these companies - and by consistently and transparently measuring and reporting on the impact of our investments - we hope to inspire others to also take decisive action in helping meet the SDGs by 2030.