KKR touts profitability of 'green' measures

Going green makes green, according to Kohlberg Kravis Roberts.

The firm’s portfolio companies have saved around $365 million since 2008 due to energy efficiency, waste handling, process improvements and other initiatives implemented through its Green Portfolio Program, the firm announced in a statement.

The programme, which included results from 13 of the firm’s portfolio companies, also found that the companies cut more than 810,000 metric tons of greenhouse gas emissions, 2.2 million tons of waste and 300 million litres of water since 2008.

Earlier this year, KKR co-founder George Roberts told attendees at Private Equity International’s Responsible Investment Forum that LPs want to commit capital to fund managers who adopt responsible environmental, social and governance practices. It’s a trend KKR’s global head of communications Ken Mehlman expects to continue.

“People want to know what their investment partners are doing under the hood of the companies, and the reality is there’s a lot you can do if you think long-term and if you work on partnering with active managers of companies to improve not only the returns on those companies but also, for example, their environmental performance,” Mehlman told sister site PEI. “More people are asking for it, and hopefully as more GPs do this and produce real results, that’ll only increase the appetite.”

KKR launched the programme in 2008 as a partnership with the Environmental Defense Fund. Green Portfolio includes analytics and metrics that allow companies to assess environmental performance through several indicators, including gas emissions, waste generation, and use of water, forest resources and priority chemicals. The programme includes 16 of the firm’s portfolio companies, including recent additions Bis Industries Limited, Van Gansewinkel and the Visant Corporation.

“We have a number of companies in the pipeline to enroll in 2012. I think a lot of our growth is coming from Europe and Asia, since the programme primarily started in the US,” said KKR principal Elizabeth Seeger, who helps manage the programme.

According to Mehlman, one way the firm plans to expand Green Portfolio is by integrating the programme into the investment process, adding new companies to the portfolio as they are acquired. KKR should have a robust war chest of capital to spend on new investments, as it works on raising its 11th North American fund, targeting $8 billion to $10 billion. The firm is approaching a first close on the fund and has reportedly already collected $4 billion.