KKR trims $1.2 billion in portfolio company costs via ESG

ESG initiatives have reduced expenses at the buyout firm's portfolio companies.

KKR has reduced costs at 25 portfolio companies by $1.2 billion since 2008 by introducing environmental efficiencies through its Green Portfolio Program, the firm said in its fifth ESG and Citizenship report.

The report outlined its approach to responsible investment against the backdrop of closer scrutiny by limited partners of corporate citizenship activities.

KKR is seeking to boost the exposure of its portfolio companies to environmental, sustainable and green policies, the firm said.

Fifty six of KKR's portfolio companies have participated in ESG programs the firm has undertaken over the last six years, with 28 percent of the firm's portfolio businesses having publicly disclosed ESG or corporate citizenship-related performance, according to the firm's report.

KKR launched its Green Portfolio Program in 2008, partnering with the Environmental Defense Fund (EDF) in order to review the waste and natural resources-related activities of its portfolio companies, starting with three of its North American holdings.

The initiative was the outgrowth of the relationship KKR established with the EDF when it agreed to acquire Texas energy company TXU Corp with TPG Capital in 2007. KKR and TPG took a number of steps to make TXU more environmentally friendly as part of the deal, which also included the participation of the Natural Resources Council, in order to reduce air pollutants in the state of Texas. 

Its Green Portfolio Program has been overseen by the firm and Capstone since 2014. The two groups plan to launch a new platform and model this year to tackle what they refer to as eco-efficiency, eco-innovation, and eco-solutions at its portfolio companies. KKR plans to provide further details about the new program later this year.