Sustainable Innovation Platform
Supporting Sustainable Innovation at KKR
The needs of companies in our portfolio continue to change with the world around them. The support we provide has evolved to reflect this fact as well as the dynamic nature of the companies that make up our portfolio. In late 2016, we began evaluating how to enhance our proactive ESG programs to better support sustainable innovation. We will continue to offer companies access to a range of best practices, trusted experts, tested resources, and a nuanced understanding of the issues that are most relevant to them.
In partnership with global NGOs and the companies in which we invest, we have built a community of trusted experts and peers. By consistently working to understand the issues that are most relevant to each company and learning from these companies’ approaches, we help them to foster innovation and embed more sustainable practices into their operations. We continuously work to enhance and introduce new portfolio value creation resources and tools to better support and learn from our companies.
Our Model for Value Creation
KKR’s growing array of ESG-related value creation programs, tools, and resources aim to enhance our portfolio companies’ sustainability initiatives across a broad range of common issues. We work to deliver practical and effective resources to help our portfolio companies achieve meaningful results and long-term benefits. In addition to the offerings shown below, we provide customized guidance and support to create sustainable value at our portfolio companies.
Improving supply chain management practices
A global initiative through which we analyze existing company policies and procedures and provide resources to improve human rights and environmental management in supply chains. As of today, we have worked with approximately 30 companies in our private equity portfolio to review their procedures for sourcing practices and possible supply chain risks. We develop action plans where we identify a need for improvement.
Recruiting, hiring, and retaining U.S. veterans
A U.S.-based initiative aimed at recruiting, hiring, and retaining veterans across our U.S.-based portfolio companies. Since 2011, KKR’s participating Vets@Work companies have hired nearly 62,500 veterans and military spouses. The objectives of the program are to highlight the talents and leadership abilities veteran hires can bring to private sector employers. We support the continuation and expansion of existing veteran hiring programs as well as encourage the formation of new formal veterans hiring programs. We deploy tactics such as webinars, 1:1 conversations, and in-person events.
Encouraging healthier and more productive workplaces
A U.S.-based incentivized, workplace-based, wellness initiative designed to engage employees on their biometric health scores and provide resources to help them address risk factors for cancer and cardiovascular health, including smoking, obesity, hypertension, and diabetes. It is based on the premise that employees who know their key health indicators are able to make better decisions for their health and ultimately improve their well-being. This program also supports a community of best practice sharing between engaged portfolio companies. Wellness Works was launched in 2011 with the guidance of the American Heart Association (AHA). To date, the U.S.-based program has engaged more than 250,000 employees at 10 companies.
Encouraging thoughtful transparency and stakeholder engagement
A global approach in which we provide guidance on voluntary codes and frameworks of transparency that help drive anti-corruption and anti-bribery best practices. We encourage our private equity portfolio companies to enhance engagement with their stakeholders by educating them about the voluntary codes and frameworks of transparency. Since 2011, we have supported these efforts through a series of webinars on relevant topics, such as best practices in environmental, social, and governance (ESG) and sustainability reporting, how to assess issue materiality, and overviews of existing and emerging standards for sustainability communications. In 2012, we launched a partnership with Transparency International (TI), a global anti-corruption NGO. Through this partnership, we seek to enhance our private equity investment and company management processes, specifically in business integrity.
Promoting worker safety while boosting productivity
A global effort, launched in 2015, built on a proprietary Worker Safety Guide that is made accessible through webinars and in-person trainings. The handbook illustrates the foundational elements of an effective management system and is designed to highlight opportunities for continuous improvement in health and safety performance. We expect to continue this effort in the years to come.
Driving value through more diverse workforces and inclusive workplaces
In 2017, we partnered with BSR to develop an inclusion and diversity questionnaire to gather baseline information about select portfolio companies’ practices and to provide recommendations and resources to improve their long-term performance.
Addressing the risks of electronic data
In 2016, we broadened our efforts to encompass data management practices and digital resources. In 2017, we completed a cybersecurity assessment of relevant private equity portfolio companies, including a review of data privacy and risk management practices. We then provided each company with an individualized benchmarking report for consideration.
Helping companies assess climate impact
IN DEVELOPMENT IN 2018
Climate change is a global challenge and will require solutions at all levels. As such, investment managers, portfolio companies, and communities must work to fully understand the immediate and longer-term impacts of climate change. Forward-looking companies can devise solutions and become climate resilient by embracing new processes and adopting emerging technologies. We are developing an approach to help companies assess climate impact.
Building businesses by strengthening communities
IN DEVELOPMENT IN 2018
We support portfolio companies' citizenship efforts by helping them build relationships with nonprofits as well as promote employee engagement. We are developing a suite of resources that portfolio companies can leverage to harness and support the power of their employees and communities.
Managing environmental impacts while improving businesses
LAUNCHED 2008; REPOSITIONED IN 2015.
Through this global effort, we identify, support, and highlight environmental initiatives at KKR portfolio companies across three areas: eco-efficiency, eco-innovation, and/or eco-solutions. The program applies KKR's approach of assessing, measuring, optimizing, and highlighting performance to support participating portfolio companies' efforts to manage their environmental impacts while also seeking to improve their businesses. Learn more here.
Building better relationships with organized labor
We have introduced several portfolio companies to the Gephardt Group since 2009 to support relationships between management and organized labor. Additionally, we have implemented an employee engagement strategy, which includes a management equity program, at four KKR Industrials investments. Read a case study about the building stronger companies through employee engagement and ownership here.
Introducing New Programs
We engage with our companies on topics that range from eco-efficiency and eco-innovation to responsible sourcing and healthy workforces. In the past year, we began expanding our resources to encompass data privacy as well as inclusion and diversity, and we are working to develop programs on climate change and citizenship during 2018.
As we move forward, we aim to ensure our model of engagement on sustainability issues remains flexible, constructive, and relevant. Our offerings will continue to adapt with the challenging environment in which our businesses operate.
Focusing on Disruption and Innovation
Disruptive technology and innovation are creating new markets and value networks around the world. These developments present unprecedented risks and opportunities. In response, KKR has created our first Innovation and Technology team, led by Global Head of Innovation and Technology Usman Rabbani.
This team is working to ensure that our new investments, our portfolio companies, and our Firm are adequately informed and engaged to assess disruptive trends. It is building KKR’s knowledge, resources, and relationships in the technology sector and other areas to benefit our entire organization.
Resources to Drive Progress Across Our Portfolio Companies
We work to deliver practical and effective resources to help our portfolio companies achieve meaningful results and long-term benefits. In addition to the tactics below, we offer customized guidance and support to create sustainable value at our portfolio companies.
In the spirit of innovation and value creation, in 2016, KKR launched an Eco-Innovation Award as a mechanism to encourage and reward innovative, environmentally beneficial projects that create business value at KKR portfolio companies.
The award recognizes the achievements of our portfolio companies and is intended to inspire them to identify new and enhanced ways of creating sustainable value. Specifically, the award program is intended to:
- Help drive significant, measurable improvement in environmental impact (e.g., energy or water use).
- Highlight measurable cost savings and/or added revenue that result from implementation of a project.
- Encourage innovation, environmental awareness, and employee engagement at KKR portfolio companies.
The winner of the 2017 KKR Eco-Innovation Award was US Foods, one of the largest foodservice distributors in the United States. US Foods was selected for its Serve Good product line, which is composed of sustainable food and non-food products that are responsibly sourced or contribute to waste reduction. The product line enables restaurants to serve quality food while also considering the environmental impact of their offerings. In this way, the Serve Good products demonstrate business value through increased customer loyalty and revenue. Learn more about its project here.
The winner of the 2016 KKR Eco-Innovation Award was Qingdao Haier Co., Ltd. (“Qingdao Haier”), the white goods home appliance subsidiary of Haier Group. Qingdao Haier was selected for its development of energy-efficient air conditioners that reduce energy consumption using innovative technologies. Qingdao Haier’s winning Haier Intelligent Air Conditioning project includes a series of nearly 100 energy-efficient inverter room air conditioners. These innovative consumer appliances feature six industry-leading technologies that use smart technology sensors to detect body movement and temperature, and thereby adjust the air conditioner output capacity accordingly. Learn more about its project here.
As winners, US Foods and Qingdao Haier were awarded both a financial prize to enhance broader environmental initiatives as well as customized project enhancement support from KKR and KKR Capstone.