KKR: Leveraging Sustainability
Posted: 6 Feb 2012
Date Written: September 6, 2011
The case describes KKR's Green Portfolio Program, one of the firm's environmental initiatives, which has achieved $160 million in cost savings. While pleased with its progress in achieving greater energy efficiency and reduced carbon emissions, the firm is looking for other ways to expand its sustainability initiatives, such as in its supply chain and incorporating sustainability into its due diligence and deal making processes.
Learning Objective: This case examines sustainability in the context of a preeminent private equity firm, KKR. KKR has set up an organization called KKR Capstone focused on creating operating improvements in KKR's portfolio companies. One of these initiatives is an energy-savings program, with a concomitant reduction in carbon emissions, worth $160 million. While worthwhile, this is a fairly narrow topic. This raises the question of what other cost savings that contribute to sustainability are possible. The case also discusses an initiative regarding supply chain risks. No examples are given of sustainability initiatives that create new revenues. More generally, there is the question of how to define materiality - what really matters - in terms of the contribution of sustainability to financial performance.
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