Green Portfolio Program Reaps Huge Benefits for KKR

Green Portfolio Program Reaps Huge Benefits for KKR

Image CC licensed by Flickr user didbygraham

Today, we announced  the 2009 program results for our partnership with private equity leader, Kohlberg, Kravis and Roberts (KKR). The Green Portfolio Program harnesses environmental management and innovation to improve the financial and environmental performance of KKR’s portfolio companies.

Launched in 2008 with three pilot companies, U.S. Foodservice, Sealy and PRIMEDIA, the program delivered impressive financial and environmental results in the first year. Since then, we’ve been busy rolling out the tools and methodologies, which these pilot companies helped us refine, to five additional KKR portfolio companies.

To-date, the eight reporting portfolio companies – Accellent, Biomet, Dollar General, HCA, PRIMEDIA, Sealy Corp., SunGard and U.S. Foodservice – have saved more than $160 million in operating costs and eliminated more than 345,000 metric tons of CO2 emissions, 1.2 million tons of waste and 8,500 tons of paper use.

Results from KKR Green Returns projectWhile the early Green Portfolio Program results were certainly encouraging, no one, not even the optimists here at EDF, anticipated such impressive results in year two!  More than anything, these results illustrate just how powerful a focus on metrics and management can be in delivering immediate results. Ranging from initiatives to route fleets more efficiently to reduce material waste through optimized manufacturing processes, these companies are uncovering opportunities to save money and reduce environmental impact across their value chains. Check out our website to learn more about the specific company initiatives and their plans for expansion.

Equally exciting is the fact that KKR is committed to rolling out the Green Portfolio Program to their global portfolio and developing the resources to support best-practice sharing and continuous improvement of company initiatives. Earlier this year, KKR announced a handful of new companies in North America, Asia and Europe are joining the program, bringing enrollment to 20 percent of their global portfolio.  Dean Nelson, Head of KKR Capstone, said “We continue to create value in the KKR portfolio while improving our environmental stewardship. Most importantly, the portfolio companies and the communities in which they operate are benefiting from this effort, which is evident in the expansion of the program within the companies as well as across the portfolio.”

Although today’s results are incredibly impressive, they are just the beginning of what can be achieved when similar best practices for environmental management are scaled up across the private equity sector.  The TXU buyout, KKR’s Green Portfolio Program, our recent partnership with the Carlyle Group, and increasing coverage of ESG issues at industry conferences and in the media are proof of an emerging trend in the industry -- and we and we expect to see it grow.

Stay tuned for a report from Super Return U.S., one of the largest private equity conferences, taking place this week in Boston. Managing Director Tom Murray is speaking on the subject of environmental management to an audience of leading private equity firms and limited partners.

Now, more than ever, we are inspired by our work with this sector and the potential that private equity firms have to bring the power of environmental innovation to scale. Private equity firms’ investments represent approximately 10 percent of the U.S. economy and private equity backed companies employ more than 6 million Americans. Imagine if all of these companies and employees became engaged, inspired and good at environmental management?

Audrey Davenport is project manager and Geballe Fellow at Environmental Defense Fund.

Image CC licensed by Flickr user didbygraham.