Last week, the Environmental Defense Fund (“EDF”) and Kohlberg Kravis Roberts & Co. L.P. (“KKR”), a leading private equity firm, announced that a program to implement environmental best practices at several KKR portfolio companies yielded $160 million in savings over the past two years. KKR’s Green Portfolio Program launched in 2008 in conjunction with EDF’s Green Returns program, an initiative that aims to improve both environmental and business performance in companies owned by private equity firms.
According to EDF, the first eight KKR-owned companies to enroll in the Green Portfolio Program, which include such well-known names as Sealy and HCA, collectively avoided “over $160 million in operating costs, 345,000 metric tons of CO2 emissions, 8,500 tons of paper, and 1.2 million tons of waste.”
EDF reports that the Green Portfolio Program has expanded from its initial eight companies “to include approximately 20 percent of the companies in KKR’s global private equity portfolio.” In addition to its work with KKR, EDF has also collaborated with the Carlyle Group, another major private equity firm, to create an environmental due diligence screening tool which helps to identify opportunities for environmental improvements in prospective portfolio companies.
The recent success of the Green Portfolio Program has implications beyond the involved portfolio companies and their investors at KKR. It suggests that for any business, enlightened environmental management can improve profitability. Private equity firms, in particular, are focusing on sound environmental stewardship as an essential ingredient to the success of their portfolio companies.
For more information about environmental management strategies, contact Jeffrey Gracer.
