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KKR, Ken Mehlman, and the Green Portfolio Project
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In only a year, the partnership between private equity firm Kohlberg Kravis & Roberts and the Environmental Defense Fund has resulted in some surprising numbers sure to impress both tree huggers and moneymakers. It’s not often that environmentalists and investors see things eye to eye, but KKR and the EDF have shown that through cooperation and recognition of mutual interest, such partnerships can create a win-win scenario.
Private equity firms have been stereotyped as only having a “bottom-line” mentality, but this image simply doesn’t fit Kohlberg Kravis & Roberts. KKR surprised environmental activists with its February 2008 acquisition of TXU, the Texas utilities giant. In an unprecedented move, KKR placed strict environmental standards that were set up by the Environmental Defense Fund and the Natural Resources Defense Council. Indeed, both environmental groups were included in the negotiations for the $45 billion buyout. The big victory for Mother Earth was the prevention of TXU’s plan to build 11 new coal plants, which could have spelled environmental disaster for Texas.
This victory was only the beginning for Kohlberg Kravis & Roberts and the Environmental Defense Fund. In May of 2008, KKR and EDF announced the innovative Green Portfolio project. Former Republican National Committee chairman Ken Mehlman, now Head of Global Public Affairs at Kohlberg Kravis & Roberts, is deeply involved in the Green Portfolio project. These days, Ken Mehlman is focusing his efforts in encouraging environmental best practices for businesses by showing how green practices can translate into green money.
“KKR and EDF have been working together since May 2008,” Ken Mehlman explains “[We worked] to develop and test a set of analytic tools and metrics to help companies improve in several key environmental performance areas, including greenhouse gas emissions, waste, water, forest resources and priority chemicals.”
After a six-month pilot program, the Green Portfolio project kicked into high gear with stunning successes with US Foodservice, Primedia, and Sealy. By upgrading their truck fleet, US Foodservice saved a whopping $8.2 million in fuel costs and reduced carbon dioxide emissions by 22,000 metric tons (as compared to last year). Publisher Primedia raked in $2.9 million in savings by reducing paper use by 3,000 tons. Bedding manufacturer Sealy also improved their truck fleet, saving a cool $1.2 million while reducing solid waste by 650 tons. Ken Mehlman cited these successes as “good examples of how smart companies can cut costs and support the environment.”
Ken Mehlman made it plain the US Foodservice, Primedia, and Sealy were just the beginning. “Going forward, we will continue to implement Green Portfolio Project tools to generate more cost savings and environmental benefits at other portfolio companies including Accellent, Biomet, Dollar General, and HCA.”
In 2009, KKR and EDF plan to extend the Green Portfolio project across KKR’s U.S-based portfolio. KKR has launched a website that features sample tools, best practices profiles, and case studies of how KKR is promoting environmental performance among its portfolio companies.
Additional information on Kohlberg Kravis & Roberts, Ken Mehlman, and the Environmental Defense Fund:
The Wall Street Journal’s Marketwatch report on the Kohlberg Kravis & Roberts – Environmental Defense Fund partnership.
Bloomberg also reported on Ken Mehlman and the Green Portfolio Project.
Profile of Henry Kravis on Propel Earth Initiatives.
Collection of articles about global warming published by the Environmental Defense Fund.
The EDF can calculate your personal impact on the environment.
Profile of Ken Mehlman on the Jewish Virtual Library.
A pdf of the Environmental Defense Fund, KKR, and Ken Mehlman’s involvement in the Green Portfolio Project.
Video interview of Ken Mehlman and Elizabeth Seeger of the Environmental Defense Fund on Interview Nation.
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