By Elizabeth Seeger Nov 09, 2021
In a recent blog post, I reflected on ten years of ESG reporting, looking at how KKR’s approach to ESG disclosure has grown and evolved over the past decade. Even though we have made significant progress over that time, we acknowledge that there is always room to grow and provide more transparency about our work to our investors, partners, shareholders, and other stakeholders. This is why today we are pleased to publish our inaugural Climate Action Report, which describes our climate action strategy in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
As investors, we have an important role to play in supporting the global transition to a low-carbon economy. In particular, I am a believer that private equity investors can be particularly helpful in this transition.
First, as we know from our work on portfolio company environmental programs for over a decade, the private equity model is well-suited to engage with companies in supporting progress on ESG topics. We regularly use our operational experts—such as KKR Capstone—and ESG-related resources to help our portfolio companies develop, shape, and enhance their climate-focused strategies. As we have learned over the years, portfolio companies can benefit tremendously from learning from one another, and we can play a key role in connecting the dots and enabling knowledge sharing. And, maybe most importantly, given our average investment hold time, we have the time to focus on these efforts and monitor long-term performance.
For example, in 2008 we launched our Green Portfolio Program with the Environmental Defense Fund and partnered with our portfolio companies to support operational improvement programs that drove measurable environmental and business benefits. More recently, in 2020, we launched our Climate Action Education Series to provide portfolio companies with information, expert advice, and resources for understanding and managing climate risk. This program included sessions on assessing climate risk, greenhouse gas emissions measurement, and carbon offsets. More information about these efforts and additional examples can be found in our report.
Secondly, we can invest behind climate action. One way we do that at KKR is through our Global Impact Fund, which invests in businesses delivering solutions to critical global challenges across four thematic areas, including climate action and sustainable living. In this strategy, we are investing in companies whose products and services provide solutions to managing environmental impacts and climate adaptation and/or mitigation, as well as those facilitating the energy transition. Another way we invest behind climate action is through our infrastructure business. Our infrastructure business has been an active investor in renewables investing over the last 10 years, and, as of June 30, 2021, we have committed approximately $3.5 billion into renewable assets, such as solar and wind, with total capacity of over 13 GW.
Finally, KKR is committed to investing in a just energy transition, one that supports a shift to a clean energy future while recognizing the ongoing importance of supplying the conventional energy needed for well-being and economic growth around the world today. As conventional energy assets will continue to be part of the transition, we believe that by being a responsible operator we can produce better outcomes. This means working directly with our portfolio companies to help them understand their exposure to ESG issues, including climate change risks and opportunities, and helping them put in place ESG strategies, including implementing projects to better monitor and reduce GHG emissions and identifying opportunities to transition to renewable energy.
We have a lot more to do. Looking ahead, we will continue focusing on further integrating climate considerations into our investment process, advancing our understanding of how climate issues impact portfolio companies, and learning from the development of decarbonization targets that we have started to incorporate into some of our funds. We are also conducting extensive research to evaluate what a credible, firm-wide net-zero by 2050 commitment would mean for KKR as a business, including assessing implications for each strategy and asset class. We hope to have more to share soon.