In this episode, the speakers discuss why KKR views ESG as a business opportunity that both creates and protects value over time.
ESG has skyrocketed to the top of many PE firms’ list of strategic priorities in the past couple of years. PE firms that may have historically viewed ESG as a “nice to have” or a “check the box” exercise, are now increasingly considering ESG to be a business issue that is embedded in the business, not peripheral to it.
PE firms such as KKR that were early adopters of and believers in ESG are now in a position not only to lead the charge to net zero, but to share their learnings with other firms that may be earlier on their ESG journey. At KKR, ESG is viewed as a way to both protect and enhance value over time and is managed alongside other business issues.
KKR is focused on climate change, data and integrating ESG issues and subject matter expertise into the investment process. The firm views ESG data not as a way to score potential targets, but to identify a pathway to managing ESG-related risk sover the duration of the hold period. Lastly, KKR has identified three measurable ESG pillars across the portfolio regardless of industry: climate, human capital and data responsibility (cybersecurity and data privacy).
PE has an interesting role to play in the transition to net zero, and firms are likely to focus on 6 key areas:
- Creating and protecting value through ESG
- Building and deploying teams of resources and expertise
- Integrating climate and ESG cosiderations into investment processes
- Launching standalone ESG or impact funds
- Spotlighting portfolio companies that are addressing critical environmental and social challenges
- Collaborating and knowledge sharing to share solutions and best practices
For your convenience, full text transcript of this podcast is also available. Read the transcript.
Elizabeth SeegerManaging Director, Sustainable Investing, KKR
Duration 24m 00s
In this seriesSeries overview
What ESG means to KKR
What’s in store for SPACs
How today’s economic rebalancing is impacting PE
EY-Parthenon Chief Economist, Strategy and Transactions, Ernst & Young LLP
PE Pulse: Five takeaways from 1Q 2022
What PE is outsourcing to create value
How PE can use the ‘See, Solve, Scale’ process to screen investments
Why mentoring matters for women in PE
How PE firms can win tech deals
EY-Parthenon Principal, Strategy and Transactions, Ernst & Young LLP; EY Global Head of Software Strategy Group