The KKR and EDF Green Portfolio
In the age of an ever-increasing need for environmental awareness, companies and industries are scrambling to reduce the adverse effects of their operations on the environment. Kohlberg Kravis Roberts & Co. has partnered with the Environmental Defense Fund to form a joint project dubbed the "Green Portfolio."
The partnership brings the financial and commercial clout of the private-equity powerhouse to issues related to environmental care and maintenance. Pilot projects between KKR and the EDF are in the works that will attempt to find how the mega companies in KKR's portfolio can reduce waste, greenhouse gas emissions, toxic by-products, and water consumption.
In a press release by the EDF released on May 1, 2008, the Green Portfolio pilot projects will, over a period of three to six months, aid in the development of analytic tools to create more environmentally friendly business operations. The test subjects will be the companies in KKR's portfolio. These analytic tools will then be used to assess and track improvements based on a series of environmental metrics. These findings will be extremely valuable in ascertaining the operational effects on the environment and offer portfolio companies financial benefits while improving environmental performance.
The projects will occur in two phases. The first phase will involve a limited selection of KKR portfolio companies. In an unprecedented twist, all findings after the first phase will be made completely public. After the first phase is complete, all findings and results of the first phase will be applied to a broader range of KKR portfolio companies. Again, all findings, tools, and results will be published after the second phase. Kohlberg Kravis Roberts and EDF hope that by releasing all findings to the public, other companies around the globe will be able to implement the same tools to reach shared goals of environmental conscious operations.
In a related move, KKR is also participating in the EDF's Climate Corps Program to improve the energy efficiency of its office operations. The Climate Corps Program was born out of the understanding that even though the practice of green business has become an important issue, quite a number of companies are not really equipped with up-to-date and comprehensive information regarding environmental innovations. Company executives are also too busy to look into options and financial considerations regarding greenhouse gas emissions reduction opportunities. The Climate Corps Program will help solve that problem by getting interns to work on the project for the whole summer with majority of their time spent on coming up with and analyzing practical strategies. KKR has committed to undergo extensive energy audits of its offices. The findings of the audits will be used to analyze the financial and environmental gains that can be obtained by energy efficiency improvements.
The EDF recognizes KKR for its focus on improving business performance and for the rigorous process model it uses to set goals and track improvement in its portfolio companies. The groundbreaking Green Portfolio is the first ever partnership between a private equity firm and an environmental organization. The announcement of the Green Portfolio is a demonstration of its proponents' dedication to the environment and comes as a direct result of KKR's previous work with the EDF in the 2007 leveraged buyout of TXU. It is also proof that KKR will not only talk the talk, but they will also walk the walk.
KKR's partnership with the EDF is their way of fulfilling their promise of embracing environmentally sound policies and internal operations. It is also the firm's intention to spread their environmental knowledge and practice and make an impact worldwide.
KKR's Marc Lipschultz issued the following statement: "We and EDF agreed to pursue an innovative, cost-effective approach to using the private equity model to bring about improvements in environmental performance for a variety of companies, including our own internal operations. We believe this initiative will ultimately help our portfolio companies build upon their own environmental efforts while providing a workable example that may encourage other companies to make similar progress."
In a fast-paced world where profits and production rule over everything else, it is refreshing to know that some of the largest firms in the world are helping to restore our environment.
Environment Resources for KKR
Press release from EDF on Green Portfolio with KKR.
Earth Times reports on KKR's Appointment of Yoshiharu Fukuhara as Senior Advisor in Japan.
View more information on KKR founder Henry Kravis.
View information on Ken Mehlman, KKR's Managing Director and Head of Global Public Affairs.