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KKR welcomes ‘good’ and ‘appropriate’ ESG regulation

Government intervention will help mobilise private capital to address global challenges, says the firm’s public affairs and impact head.

KKR’s co-head of global impact and public affairs chief Ken Mehlman says he welcomes regulatory intervention when it comes to ESG.

“The right kind of regulation is very much a positive development,” he said at an online event last week, noting that it ensures better disclosure and guards against greenwashing.

Mehlman, a partner at the US-based private equity firm, said during a PEI CFO All Access event that regulations such as the European Union’s sustainability-related disclosures in the financial services sector (SFDR) are suitable tools for helping “push societies in a certain direction”.

“That direction is towards more sustainability. And that’s a good thing; it’s appropriate. There are people that say, ‘Well, government shouldn’t be involved in that,’” said Mehlman, who then referenced large-scale government-led programmes, from the recent covid-19 vaccination development to the construction of highway systems throughout the 20th century. “No one said government shouldn’t build highways. They recognised that was an imperative for the way societies were operating.”

Mehlman said KKR has identified five main future global challenges: climate change, resource scarcity, cyberattacks, public health and changes in how people work. With the “right regulation”, he said, “isn’t it an imperative that we… create a regime regulatorily that encourages investors and others to build as large a private investment space as possible to address these five big challenges?”

After spending 12 years in US politics, including serving as chairman of the Republican National Committee and managing President George W Bush’s 2004 reelection campaign, Mehlman joined KKR in 2008. In 2011, KKR’s impact investing strategy began to take shape around the firm’s first solar investment. Since then, KKR has committed around $7 billion across 40 investments “addressing a critical global challenge”, Mehlman said.

Beyond regulations that direct sustainable investments, Mehlman said the combative political discourse in the US – in which something like a protective face mask can be a source of political division – needs to change under the current administration.

“How do we create more unity of purpose in the United States?” he asked. “The extent to which we can appreciate that the things that bring us together and unite us are much more important than what divides us is very important. Because until you get that right, everything else becomes a political debate.”