As Securities Exchange Commission chair Gary Gensler weighs in on ESG-related changes he plans to make at his agency in front of Congress today, KKR has released a public status report on a social change-oriented initiative of its own. 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.
”Each portfolio company reports two to three metrics measuring its contribution toward the advancement of the SDGs, in addition to reporting performance on company-specific and cross-portfolio ESG topics,” the inaugural report reads. Limited partners receive a lengthier report on progress.
That oversight 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.
If the Institutional Limited Partners Association’s newly released ESG assessment framework provides any guide, KKR’s impact fund is off to a good start: with measurable key performance indicators and oversight of progress, the fund already notches high marks on the preliminary checklist.
Time will tell how closely other funds follow suit.