by Justin Vertongen
With December 2012 marking the fourth year of its Green Portfolio Program, Kohlberg Kravis Roberts & Co. L.P. (KKR) released its annual results this month and the figures have indicated another exponential improvement since its inception. To achieve such results, KKR partnered with the Environmental Defense Fund (EDF) to drive operational cost savings within their portfolio companies through environmental innovation.
Last year, KKR disclosed in their report savings of $365 million and the displacement of 2.6 million tons of waste as well as carbon emissions equivalent to burning almost 91 million gallons of gasoline. Amazingly, those figures were the combined results of just 13 portfolio companies.
KKR worked with additional companies this year, 24 portfolio companies total, and as one would expect, the savings trumped last years’. On December 17th 2012, they reported savings of $644 million and averted 1.2 million tons of greenhouse gas (GHG) emissions. KKR was also able to displace 3.4 million tons of waste and divert 13.2 million cubic meters of water. With more than a 50% increase in all areas, KKR has proven how to unlock value for its portfolio companies.
KKR’s Green Portfolio webpage breaks down the reduced environmental impact and associated cost saving for each company. Similar to how this year’s results were laid out, KKR also identifies the strategic advantage, both environmentally and financially, of adopting sustainable business practices
As stated on our blog last year, “private equity funds are an unusual type of asset management” in that they often control a large portion of privately held companies. In order to create value for their stakeholders, private equity funds must be resourceful, like KKR, to proactively reduce their environmental impact and produce a financial return in the process.