Environmental Defense Fund’s Green Returns team is just back from the Dow Jones Private Equity Analyst Outlook 2010 conference in New York, where we sponsored, exhibited and presented. There is no doubt that EDF is the first environment group to do all three at a Dow Jones conference. It was a great chance for us to connect with executives from a number of leading private equity and venture capital firms, including 3i, Apollo Management, Clayton, Dubilier & Rice, Huntsman Gay Global Capital, THL Partners and others.
Our message at the conference and for the private equity sector in the future is straightforward:
Environmental management and innovation should be one of private equity’s key strategies now and for the future.
A changing world and challenging economy is forcing companies in all industries – including private equity – to transform to remain competitive. As a result, private equity firms are looking for new ways to lead and create value. Taken to scale across portfolios, a creative approach to environmental issues can create value by improving due diligence, boosting portfolio company performance, presenting new growth and investment opportunities and building stronger relationships with LPs and other stakeholders.
Today’s announcement [PDF] by private equity leader Kohlberg Kravis Roberts & Co. (KKR) is proof that environmental management can help drive value creation at scale. In fact, the release includes a quote from KKR Co-founder Henry Kravis stating that “The business case for environmental management has never been stronger.”
That’s why KKR has expanded the Green Portfolio program that we co-developed and tested at three companies in 2008 (U.S. Foodservice, PRIMEDIA and Sealy) to include twenty percent of its global private equity portfolio today.
In 2008, EDF and KKR worked with U.S. Foodservice, PRIMEDIA and Sealy to measure and improve business and environmental performance. These pilots helped EDF to develop our Green Returns approach and the three companies to capture over $16M in annual cost savings and reduce 25,000 tons of CO2 pollution. Based on these results KKR expanded the Green Portfolio Program in 2009 to include Accellent Inc., Biomet Inc., Dollar General Corp., SunGard Data Systems Inc. and HCA Inc. Today’s announcement adds four additional companies: First Data, Lehigh Phoenix (a division of Visant), Oriental Brewery and Tarkett.
EDF believes that this is just the beginning. Environmental management can play a much larger role in value creation across the broader private equity industry. That’s why we recently released our Green Returns approach, resources and case studies to help industry leaders take advantage of this opportunity.
Green Returns is a tested and flexible approach for private equity firms to measure and improve business and environmental performance across their portfolios. It is tailored to the strengths of the private equity sector and has quickly proven to yield significant business and environmental results, including millions of dollars in annual cost savings and thousands of tons of pollution.
Visit http://edf.org/GreenReturns to learn more and get started today.