KKR’s ESG priorities for 2023

Asset-level action plans and climate risk evaluation are among the ESG priorities outlined in KKR’s Sustainability Report, released on Friday.

The firm considers ESG management to be an “essential part of long-term business success”, and has outlined its 2023 asset class-specific priorities for ESG integration. These are:

Private equity:

• “Expanding employee ownership” by “deepening and operationalising” programmes across the global PE portfolio.
• Working alongside portfolio companies to develop ESG measurement and reporting procedure, including for each asset’s “unique set of material ESG topics”.
• Developing “topic-specific toolkits” to help portfolio companies.
• Encouraging companies to incorporate ESG factors into their exit strategies, particularly IPOs.

Private credit:

• Continuing to implement the “engagement dashboard”. Developed in 2022, the dashboard was designed to “monitor key outcomes, set goals and measure the meaningful results” of engagement efforts.
• Developing “reporting templates” to track performance in the portfolio.
• Incorporating “climate data and climate risk evaluation” into ESG Credit 2.0, the firm’s term for including “material ESG risks and analysis in the investment process”.

Real estate:

• Introducing “asset-level action plans” to help with risk mitigation, and “ESG Playbooks” to provide guidance on ESG due diligence considerations.
• Promoting knowledge sharing by launching “ESG-focused resources for operating partners and property managers”.
• Completing a “physical climate risk assessment of our global real estate equity portfolio”.
• Updating guidance on ESG integration across the real estate credit platform and finalising an approach to “portfolio monitoring”.
• Expanding “internal teach-ins” on areas such as “climate, regulatory changes
  and net-zero pathways”.

Infrastructure

• Helping portfolio companies develop “mature” sustainability strategies centred on setting target and tracking performance.
• Integrating of “business-relevant decarbonisation and climate risk mitigation plans” at portfolio company level, “with a focus on accelerating action for high emitters”.
• Improving diversity on portfolio company boards.
• Helping portfolio companies conduct regular cybersecurity risk assessments.
• Enhancing the “vendor partner network” to assist with addressing the other priorities.

The report covers KKR’s sustainability activities in relation to its investments and at the firm level. A summary of climate-related disclosures in line with the TCFD recommendations, and its SASB report, are also included.

Last year’s offering saw the debut of the firm’s “Global Ambitions”: to focus its ESG efforts across the portfolio, KKR identified three overarching ESG goals relating to human capital, data responsibility and climate.