Mergers & Acquisitions names the 2021 PE Innovators in ESG, including, KKR.
With $459 billion in assets under management, KKR & Co.’s ESG standards and reporting matter. Limited partners evaluating the private equity firm’s progress can see how KKR hews to issues defined in the Sustainability Accountability Standards Board and United Nations’ Principles for Responsible Investing. The featured metrics are detailed: an annual impact report weighed in at 130 pages in 2020.
KKR focuses due diligence work on risks and upside related to climate. A specialized fund for this purpose represents a further improvement on the firm’s business model: The 2018 Global Impact Fund makes investments related to “climate action, lifelong learning, sustainable living, and inclusive growth” compatible with the United Nations’ Sustainable Development Goals.
Investments so far include municipal and industrial wastewater treatment company Axius Water, formed from the acquisitions of Environmental Operation Solutions, Nexom, and Environmental Dynamics International, and farm-based carbon credit provider GreenCollar. The $1.3 billion fund tracks environmental impacts alongside financial targets. Greencollar, for instance, has saved an equivalent of 5 million tons of carbon dioxide.
Providing these metrics and more to LPs will increase oversight that could prove critical. A large gap between LP expectations and current portfolio company reporting exists, Mergers & Acquisitions has previously reported. An LP with positions across numerous funds could be inundated with ESG reports citing disparate measures.
“At KKR, we have built a robust global network of ESG-related subject matter experts, including NGO partners and technical experts, and we always strive to bring their learnings and best practices to everything we do,” the firm says.
KKR will almost triple its sustainable-investing group, Bloomberg News reported recently. The unit responsible for working with investment teams to implement sustainable strategies and metrics across asset classes will rise to 12 from four by year-end, according to its leader, Elizabeth Seeger. Recent hires include former Blackstone ESG chief Alison Fenton-Willock and Dianne Kim, KKR’s first ESG compliance officer, who previously worked at CVC Credit Partners.