Profile: Elizabeth Seeger, KKR
The Drawdown (TDD): You joined KKR in 2009 to oversee ESG throughout the investment firm’s process. What was KKR’s ESG set up like back then and how has it evolved since?
Elizabeth Seeger (ES): Prior to my joining KKR, my role didn’t exist; not just at KKR but anywhere among our peers. The role I have and the programme we’ve developed has greatly evolved in the last 10 years.
KKR realised there was important work to do on ESG related issues and understood it had a role to play in value creation back in 2007-8, when the firm started collaborating with my former organisation, the Environmental Defense Fund. Around that time, KKR created the global public affairs team to focus on stakeholder engagement, led by Ken Mehlman. Our efforts really started when Ken joined in 2008 followed by me in 2009. Along with others, we’ve been building the team and our subject matter expertise ever since.
TDD: KKR’s partnership with the Environmental Defense Fund saw the launch of the Green Portfolio Program - what does that focus on?
ES: We started talking about the Green Portfolio Program in 2007, and publicly in 2008. It has had two long lasting impacts.
First, we realised there was work to be done in terms of creating value throughout our portfolio of companies by focusing on ESG issues. Up to that point, I don’t think this had been especially recognised within PE or focused on in that way.
Second, it became an important model for us in how we work with our portfolio companies on sustainability issues, providing them with guidance and resources in a meaningful way. It also provided a model for how we can effectively partner with third party organisations, particularly NGOs or credible thought leaders.
We’ve since launched other partnerships with NGOs, which provide guidance and resources directly to our portfolio companies on numerous topics. For example, we created our responsible sourcing initiative (related to supply chain programmes) with another nonprofit and other programmes related to environmental performance, employee wellness, anti corruption and anti bribery, and so on.
What started with the Green Portfolio Program and continues to be central to our approach today is the emphasis on ESG management as part of our value creation process. This isn’t nor should it be box checking. We should be thoughtful about ESG topics, think about how we create value for our companies and, ultimately, the impact we’re having on our communities and environment.
TDD: Regarding measuring ESG, how has your process evolved?
ES: KKR has consistently focused on ESG management as part of our value creation process. We consider ESG issues to be business issues and want them to be managed in the same way as other business issues. Therefore, we’ve integrated the consideration of ESG issues throughout the investment process, but there is always more work to do. What’s key is that it is not a one-size-fits-all approach, which is why we don’t take one.
When I joined KKR in 2009, there was little to no guidance for investors on how to think about what is material for each particular company from an ESG perspective and how to evaluate it. When the Sustainability and Accountability Standards Board (SASB) launched in 2011, I immediately got involved because I felt their approach to defining what is material from an investor’s perspective was the exact toolkit we needed to think about integrating ESG related considerations into our own investment process. Today measuring ESG performance remains very company-specific, but we now have third party guidance to help inform our approach.
TDD: KKR’s internal value creation team - Capstone - identifies and delivers sustainable operational performance within KKR’s PE portfolio companies. How involved are you with this team?
ES: Very! Lots of our ESG-related engagement with portfolio companies has been in collaboration with the Capstone team, starting with the Green Portfolio Program back in 2007-8. Since then, our Public Affairs team and Capstone have partnered together on a number of initiatives, including responsible sourcing and our work on portfolio companies’ diversity, equity and inclusion efforts.
Most recently, throughout the pandemic, we worked closely together to support our portfolio in a number of meaningful ways, including through benefits, resources and so on. We work together to co-create programmes and leverage the KKR Capstone model to help drive real progress.
TDD: What do you make of the latest ESG regulations in Europe (e.g. Taxonomy, SFDR) and do you see any challenges?
ES: Companies are currently getting many data requests from different people, asked in different ways and this is increasing quite rapidly today. In my experience, it is challenging when regulations introduce additional disclosures rather than align with existing disclosure standards or frameworks, such as SASB, TCFD or GRI.
However, I understand, appreciate and support the goals of the regulations, which is to bring clarity and consistency while removing opportunities for intentional or unintentional greenwashing.
TDD: You’re currently on the Sustainability Accounting Standards Board’s (SASB) standards board and you’re a member of the Reporting and Assessment Advisory Committee for UN PRI - how actively involved are you with developing ESG frameworks and regulations for the industry?
ES: I believe it is really critical to get standards and disclosures focused on the right issues which help investors understand what is important and how companies are performing. I’ve spent a lot of my time on industry efforts related to this topic, including with SASB and the PRI.
I think SASB in particular has changed the dialogue on what ESG is, where it belongs and how people think about it. Prior to the last couple of years, ESG was often mistakenly confused with CSR, corporate citizenship or philanthropy. These are business issues and SASB puts that at the forefront of how it thinks about things, which I think is critical to progress.
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Elizabeth joined KKR in 2009 to oversee ESG throughout the firm’s investment process. In January 2021, she was appointed managing director. “It was a recognition of the importance of this work, rather than a change in my role,” she says. “At KKR, we are committed to being responsible investors and thoughtfully incorporating ESG management throughout our portfolio.”