KKR's Green Portfolio Program Shows How Smart Investments See Green

KKR's Green Portfolio Program Shows How Smart Investments See Green

Today, private equity giant Kohlberg, Kravis & Roberts (KKR) announced the third year of results for its Green Portfolio Program, a project we launched together in 2008. We piloted the program with only a handful of KKR companies and our goal was to demonstrate that private equity firms are well-positioned to take advantage of environmental management at the portfolio level.

Fast-forward three years, and KKR's now-global program is reaping financial and environmental benefits at a scale that makes it clear that business and environmental performance go hand in hand. Through a range of operational improvements at 14 companies around the world, the Green Portfolio Program has achieved over $365 million in operating cost savings and avoided 810,000 metric tons of greenhouse gas (GHG) emissions, 2.6 million tons of waste and 300 million liters of water since 2008.

These portfolio companies are taking advantage of opportunities across their value chains to improve environmental and financial performance:

  • Tarkett, a leading manufacturer of flooring and sports surfaces in France, improved manufacturing processes and upgraded cooling technologies to reduce water consumption more than 20 percent -- the equivalent of over 120 Olympic sized swimming pools.
  • Dollar General, a discount retailer with more than 9,800 stores in the U.S., is reporting sizeable results for the second time. A continued focus on reducing and reusing cardboard at stores and distribution centers has helped Dollar General reduce waste by 74 percent , and add $80 million to their bottom line through cost savings and recycling revenue since joining the program.
  • Pets at Home, the U.K's largest retailer of pet food and products, focused on reducing emissions from its fleet, which makes deliveries to over 300 stores across the U.K. Through a combination of equipment upgrades, driver training programs and improved delivery scheduling, it reported early success -- saving $1.8 million in fuel costs and sparing the air 3,400 metric tons of GHG emissions.

While the results of the Green Portfolio Program alone are impressive, they are even more significant because they illustrate an underlying commitment and rigor from KKR to enroll companies, identify opportunities and report results in a transparent manner.

Over the past year, KKR has made a number of moves that indicate the Green Portfolio Program and its broader environmental, social and governance (ESG) efforts are here to stay. KKR teamed up with Business for Social Responsibility to develop an approach to managing ESG issues throughout its global supply chain and brought on a handful of our EDF Climate Corps fellows to identify energy efficiency investments at portfolio companies.

In September, KKR published its first annual ESG report, a comprehensive blueprint laying out the founder's vision for responsible investing. Underlying all of these efforts is KKR's commitment to bringing on dedicated full-time staff to focus exclusively on growing its ESG programs and impact.

On the investment side, KKR has been busy identifying opportunities to generate strong financial and environmental returns. Just yesterday, it announced a joint investment with Google and Recurrent Energy in a portfolio of solar PV farms that will provide the Sacramento Municipal Utility District with 88 megawatts of clean power in the coming years.

KKR's investment will be drawn from a new venture, SunTap Energy LLC, formed to invest in solar projects in the U.S. with a $95 million line of equity. SunTap represents KKR's first domestic renewable energy project and adds to its global portfolio of investments, including Sorgenia, a French wind park operator, and T-Solar, a Spanish solar company.

At EDF, we continue to seek significant opportunities in the private sector to improve environmental performance, and the private equity industry has shown its potential to move the needle in a meaningful way. KKR is helping to define an emerging set of best practices for the industry through its Green Portfolio Program and growing effort to manage ESG issues systematically.

The time is now for more private equity firms to raise the bar for the industry, and make good on the opportunity to deliver superior returns -- for investors, the environment and the communities in which they operate.

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