Elizabeth Seeger, Managing Director of Sustainable Investing at KKR, joins Winna Brown to 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 considerations 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