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KKR Green Solutions Platform

Exclusive: KKR Re-launches Environmental Program, 22 Companies Report Impact

KKR Green Solutions PlatformCompanies can gain more than increased efficiencies and savings on utility bills from their environmental projects. Environmental opportunities can also drive business value and result in products and services that address environmental challenges, according to KKR.

Recognizing this, the global investment firm today announced it has re-launched its 8-year-old environmental initiative under a new name — the Green Solutions Platform — and with an expanded mission.

KKR’s Green Portfolio Program, launched in 2008 in partnership with the Environmental Defense Fund, focused on promoting eco-efficiency best practices across participating portfolio companies. These included programs to improve waste management and recycling practices, conserve water or curb emissions, and others that also resulted in cost savings and new revenue.

The Green Solutions Platform will focus on a wider spectrum of business and environmental benefits across three-areas: eco-efficiency, eco-innovation and eco-solutions.

The new initiative doesn’t apply a one-size-fits-all approach to its diverse portfolio of companies. Instead its internal team, along with KKR Capstone, and NGO partners including EDF, work with companies to select an area of focus, establish metrics for assessing performance, develop and implement a plan with goals and a timeline, and then measure and report the results.

In an exclusive interview with Environmental Leader, Elizabeth Seeger, director at KKR and a leader of the Green Portfolio Program since 2008, said while the old program worked well at helping companies avoid costs and improve their environmental performance, it was time to find new ways to drive environmental and business benefits.

Helping Companies Find Low-Hanging Fruit

“There’s a lot of low-hanging fruit out there and we were able to help companies find those opportunities, but we were leaving a lot of projects off the table because they fell outside the scope of the program,” Seeger says. “Eco-efficiency is an incredibly important part of managing environmental impacts, but there is lot out there that needs to be done in the world of eco-innovation and eco-solutions.”

From both an environmental and financial perspective, the program found success. During its first eight years, 27 companies reported that they achieved nearly $1.2 billion in avoided costs and added revenue, and avoided more than 2.3 million metric tons of greenhouse gas emissions, 27 million cubic meters of water use, and 6.3 million tons of waste through eco-efficiency efforts.

As an example: the KKR program helped First Data improved its data center efficiency, saving $17.1 million in electricity costs and avoiding 122,000 metric tons of GHG emissions due to efficiency improvement since 2009.

Driving Top Line Growth

The second area of the newly launched Green Solutions Platform — eco-innovation — focuses on companies’ projects that drive top line growth, plus environmental benefits. “Top-line benefits like revenue growth, employee appreciate, benefits beyond cost savings,” Seeger explains.

Gardner Denver Nash, for example, develops and sells products that help its customers improve their efficiency and reduce their environmental impact in industries including chemical, petroleum, power, paper, mining, environmental, food and wastewater treatment. One such product that KKR says is an eco-innovation is the Nash hybrid system, used to evacuate gases and vapors from vessels, which has been modified to reduce steam consumption by up to 15 percent, thus reducing energy and GHG emissions.

KKR calls the third area eco-solutions. It focuses on companies where the core business, product or service drives a positive environmental impact, such as CITIC Envirotech Limited (CEL), a wastewater treatment plant operator in China whose membrane bio-reactor technology produces treated water that is virtually free of bacteria, microbes, and other suspended solids.

“KKR’s role in helping these companies succeed is primarily to be an investor,” Seeger says. “We’re helping them grow, helping them create their product line. We’re supporting the business and its growth objective.”

Business Opportunities ‘Are Broader Than Eco-Efficiency’

Seeger says KKR this year saw the largest number of participating companies in the environmental program: “We know that this program will continue to evolve, but we are already very encouraged by the range of companies engaged beyond our private equity portfolio and the opportunities that we have found that are broader than eco-efficiency.”

Private equity portfolio companies reporting results include Alliance Tire Group, Bis Industries, Capsugel, CEL, Dalmia Cement, First Data, Gardner Denver Nash, Gardner Denver Thomas, GoDaddy, HCA, Lake Region Medical, Panasonic Healthcare, Pets at Home, PortAventura, Sundrop Farms, Sungard Availability Services, Tarkett, Toys “R” Us and US Foods. Coriance, an infrastructure portfolio company; Pacific Retail Capital Partners, three shopping malls in KKR’s real estate portfolio; and Ursa, a special situations portfolio company, are also reporting into the program.

Environmental Defense Fund will continue to provide strategic advice to KKR and the new Green Solutions Platform. Says Tom Murray, vice president of corporate partnerships at EDF: “We’re proud to see this effort that we worked with KKR to launch eight years ago continue to evolve, expanding beyond the bottom-line benefits of eco-efficiency to the potential top-line benefits from companies making environmental solutions core to their business models.”

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