Private equity firm Oak Hill Capital Partners and nonprofit environmental group Environmental Defense Fund have announced that they are working together to improve the financial and operational performance of middle-market portfolio companies by integrating environmental metrics with core business strategies.
The two organizations have created a methodology to map companies according to environmental metrics, financial opportunities and management readiness in order to focus on those that are capable of making the greatest impact. Their goal is to both improve environmental performance at companies within Oak Hill’s portfolio and to create a model that can be used by other middle-market firms to find environmental opportunities in their own portfolios.
A pilot program focused on dining and arcade games firm Dave & Buster’s; Jacobson Companies, a Des Moines, Iowa-based transportation and logistics firm; and ViaWest, one of the largest privately held data center, cloud computing and managed service providers in North America.
The pilot, which focused on a small number of those companies’ facilities, identified more than $700,000 in annual energy cost savings and an annual CO2 emissions reduction of 2,900 metric tons from upgrades to such systems as lighting and climate controls. Oak Hill Capital and EDF plan to use these pilot results to implement broader programs in these companies. Oak Hill has also used EDF’s Climate Corps program and its own CEO conference to further the project.
With investments in nearly 15,000 companies employing over eight million people, the private equity industry is, according to EDF, “uniquely positioned” to take advantage of untapped value creation through environmental management. The company says that the collaboration with Oak Hill shows that middle-market firms, which represent the majority of the private equity sector, can create significant value for investors and the planet through environmental management.
Earlier this week, EDF released a report on the “virtuous cycle” of energy efficiency – a model of change that the nonprofit says applies to energy efficiency across many companies. Applying the cycle’s five components – executive engagement, resource investment; people and tools; identification, implementation and measurement; and results and stories – to a company’s own circumstances is a set model for increasing energy efficiency, the nonprofit says.