Responsible Investment at KKR
With our understanding of global issues, we believe that enhancing value in today’s world includes improving the environmental, social, and governance (ESG) aspects of a business.
Responsible investment is a way of doing business that we believe makes us smarter, better investors. We are dedicated to better understanding our investments and unlocking value in innovative ways. As a global investor, we have an opportunity and responsibility to be thoughtful about a diverse range of ESG issues affecting the companies in which we invest.
Since formalizing a focus on responsible investment eight years ago, we have demonstrated that managing ESG issues in our investments helps us generate strong returns for our Firm and our fund investors while also having a positive impact on society. We do this by avoiding and mitigating risk wherever possible and by discovering ways to create sustainable value.
KKR in Dialogue
Elizabeth Seeger, Director, Sustainable Investing, and Ken Mehlman, Member and Global Public Affairs, discuss responsible investment at KKR. Read a snapshot below and the full conversation here.
Our responsible investment approach is constantly evolving. While we are proud of the progress we have made, we believe that our work is far from over and seek to create additional value as our journey continues.
In 2008, we formalized our efforts to protect and grow value by proactively considering stakeholder issues as part of our investment process. We established a Global Public Affairs team to lead this strategy, as well as other efforts at the Firm. We also partnered with Environmental Defense Fund (EDF) to improve portfolio companies' environmental and and business performance. Working with EDF, we launched the Green Portfolio Program, an environmental initiative that was transformational for the private equity industry at the time.
Shortly after, in 2009, we became a signatory to the globally recognized voluntary framework of the United Nations-backed Principles for Responsible Investment. In 2011, we published our first ESG report. In 2013, we codified our processes and procedures related to responsible investment by developing a global Private Equity ESG Policy. We broadened and deepened our approach by launching new programs and expanding our team.
In 2016, we continued to find ways to spur innovation, such as through our inaugural Eco-Innovation Award, and to expand our efforts across asset classes. This progress reinforced the idea that thoughtful management of ESG issues is smart business and essential to our long-term success.
During the past decade, we have used our focus on ESG management to both improve the companies in which we invest as well as identify investment opportunities. We have demonstrated that managing ESG issues in our investments helps us generate strong returns for our Firm and our fund investors while also having a positive impact on society. We continue to do this by anticipating, avoiding, or mitigating risk wherever possible and by identifying specific actions that will make a measurable difference in the results we achieve.
ESG Risks and Opportunities
The way that we and our companies manage environmental, social, and governance (ESG) risks and opportunities can help protect and create business value. Learn how we identify material ESG and reputational issues here.
Differentiated Approach to Responsible Investment
We aim to identify relevant ESG issues and incorporate the consideration of these issues into our due diligence, decision-making, and management practices in varying ways across asset classes. Our responsible investment activities fall across three categories: ESG Integrated, ESG Targeted, and Solutions Focused.
ESG Integrated: Most broadly, we work to integrate ESG considerations at each step in the life cycle for all private market investments, when applicable.
ESG Targeted: We identify investments where improving performance on critical ESG issues helps create value or mitigate risk. We provide resources and tools to manage and measure progress. Examples include companies that participate in programs through the Sustainable Innovation Platform or utilize our network and resources to begin sustainability reporting.
Solutions Focused: In these investments, a company’s business model, product, or service provides a solution to an ESG-related challenge. The products and services of these companies range from renewable energy to sustainable agriculture to financial inclusion. Explore a map of select solutions-focused investments here.