When we conducted our inaugural environmental, social and governance (ESG) survey of private equity (PE) professionals last year, it was startling to see that nearly half (49%) of our general partner (GP) respondents did not have an ESG program at their firm and had no plans to create one, despite heightened concern from limited partners (LPs) on ESG issues. What a difference a year makes—not to mention the fact that we had a higher proportion of European respondents this year, who are much more progressive when it comes to ESG issues. In our second edition of the ESG survey, a majority of GP respondents (60%) now work at a firm with an established ESG program and another 26% either have an ESG program in development or plan to create one in the near future. However, there are still some PE firms that see little value in ESG programs. As one GP respondent put it: “we think [ESG] is the most asinine initiative ever to come out in the business world.” While some PE firms eschew ESG issues and think that strong fund performance is enough to attract LP commitments, the LPs themselves are telling a different story. Eighty-four percent of LP respondents say that ESG issues are at least somewhat important when deciding whether or not to commit to a PE fund, with 18% claiming they are essential. Furthermore, 24% said they would they would commit to a fund with slightly lower historical performance if the firm had a strong ESG program. Remember, many of the largest contributors to PE funds are public pension plans, endowments, foundations and sovereign wealth funds—institutions which not only are interested in returns but also have an image to maintain. “GPs have to be more aware of investors’ desire for knowledge of their investments beyond just the financial return,” commented one LP respondent, while adding that the responsibility ultimately falls on the investors: “GPs will only change if the LPs push them to.” One of the big takeaways from this year’s survey is that more PE firms are taking the necessary steps to make ESG a fundamental part of their investment approach. For example, 28% of GP respondents indicated that their firm produces a corporate social responsibility (CSR) report, up from 18% in 2012. And while finding effective metrics to monitor ESG performance continues to be the largest hurdle for ESG efforts, PE firms continue to find new ways to measure their ESG initiatives and have increasingly utilized forums, case studies and industry events and guidelines to fill the knowledge gap. We hope that this survey serves as a lens into the current state of ESG issues in the PE industry and provides a starting point for developing a set of best practices that can be adopted by firms of all sizes. If you are interested in participating in future editions of the survey, or have any comments or suggestions for how we can improve this report, please contact us at research@pitchbook.com.

1. Sponsored by:
European firms are
far ahead of the
U.S. in adopting
ESG programs.
PAGE 6
What factors drive
ESG efforts at the
firm level? PAGE 7
LPs care more
about ESG issues
than ever before.
PAGE 13
KKR and Doughty
Hanson named ESG
leaders in 2013.
PAGE 15
2013 PE ESG SURVEY
ENVIRONMENTAL | SOCIAL | GOVERNANCE

3. Table of Contents
Introduction
Participant Statistics
ESG Programs at PE Firms
ESG at Portfolio Companies
The LP Point of View
Industry Leaders
4
5
6-10
11-12
13-14
15
Credits & Contact
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3

4. Introduction
When we conducted our inaugural environmental, social and governance (ESG) survey of private equity (PE)
professionals last year, it was startling to see that nearly half (49%) of our general partner (GP) respondents
did not have an ESG program at their firm and had no plans to create one, despite heightened concern from
limited partners (LPs) on ESG issues. What a difference a year makes—not to mention the fact that we had a
higher proportion of European respondents this year, who are much more progressive when it comes to ESG
issues. In our second edition of the ESG survey, a majority of GP respondents (60%) now work at a firm with
an established ESG program and another 26% either have an ESG program in development or plan to create
one in the near future. However, there are still some PE firms that see little value in ESG programs. As one GP
respondent put it: “we think [ESG] is the most asinine initiative ever to come out in the business world.”
While some PE firms eschew ESG issues and think that strong fund performance is enough to attract LP
commitments, the LPs themselves are telling a different story. Eighty-four percent of LP respondents say
that ESG issues are at least somewhat important when deciding whether or not to commit to a PE fund,
with 18% claiming they are essential. Furthermore, 24% said they would they would commit to a fund
with slightly lower historical performance if the firm had a strong ESG program. Remember, many of the
largest contributors to PE funds are public pension plans, endowments, foundations and sovereign wealth
funds—institutions which not only are interested in returns but also have an image to maintain. “GPs have
to be more aware of investors’ desire for knowledge of their investments beyond just the financial return,”
commented one LP respondent, while adding that the responsibility ultimately falls on the investors: “GPs
will only change if the LPs push them to.”
One of the big takeaways from this year’s survey is that more PE firms are taking the necessary steps to
make ESG a fundamental part of their investment approach. For example, 28% of GP respondents indicated
that their firm produces a corporate social responsibility (CSR) report, up from 18% in 2012. And while
finding effective metrics to monitor ESG performance continues to be the largest hurdle for ESG efforts, PE
firms continue to find new ways to measure their ESG initiatives and have increasingly utilized forums, case
studies and industry events and guidelines to fill the knowledge gap.
We hope that this survey serves as a lens into the current state of ESG issues in the PE industry and provides
a starting point for developing a set of best practices that can be adopted by firms of all sizes. If you are
interested in participating in future editions of the survey, or have any comments or suggestions for how
we can improve this report, please contact us at research@pitchbook.com.
What is ESG?
Environmental: waste, water, electricity,
transportation fuel, toxic chemicals, paper
Social: diversity, human rights, supply
chain, employee engagement
Governance: policy, management
CSR: Corporate Social Responsibility
EDF: Environmental Defense Fund
GIIRS: Global Impact Investing Rating System
PEGCC: Private Equity Growth Capital Council
PRI: Principles for Responsible Investment
ILPA: Institutional Limited Partners Association
structure, board-level oversight
2013 Private Equity ESG Survey
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4

5. Participant Statistics
2013 2012
23
14
2013 2012
28
2
# of GP Respondents
# of LP Respondents
2013 2012
3
Our GP respondents showed a much higher level
of ESG awareness than they did last year, which is
to be expected with the increased focus on ESG
issues exhibited by LPs, industry organizations and
governmental bodies. But a bigger factor is that
there was a much higher proportion of European
respondents in this year’s survey. As will become
evident throughout this report, European investors
place a much greater importance on ESG issues than
investors from other regions.
Number of GP Respondents by AUM
18
16
16
11
12
10
32
14
15
10
2
2
0
$500M-$1B $1B-$5B
0
20
4
<$500M
1
25
11
6
4
0
0
30
8
8
0
35
13
14
0
2013 2012
1
Number of LP Respondents by AUM
16
15
6
2
38
39
9
>$5B
N/A
2012
6
5
1
0
<$5B
2013
0
2
2 2
1 0
$5B-$25B $25B-$100B >$100B
N/A
Source: PitchBook
2013 Private Equity ESG Survey
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5

6. ESG Programs at PE Firms
PE firms show an increased focus on ESG issues in ‘13
GP Q1: Does your firm have an ESG management
program?
100%
Yes
100%
More than 5
years ago
80%
80%
No; it is
currently in
development
60%
40%
No; but we
have plans to
create one
20%
0%
GP Q2: When did your firm start actively
implementing ESG initiatives?
No
2012
2013
North Europe
America
2-5 years ago
60%
1-2 years ago
40%
Less than 1
year ago
20%
0%
2012 2013
Source: PitchBook
The topic of ESG in PE has received increased
attention from the media and investors over the last
year, and PE firms have responded. In our 2012 survey,
nearly half (49%) of GP respondents came from firms
that had no ESG program and no plans to create
one. Now, just 14% of GPs fall into that category,
with nearly two-thirds (60%) of respondents this year
indicating that their firm has already established
an ESG program. In addition, 26% of respondents
hail from a firm that is currently developing an ESG
program or planning to create one in the near future.
But as the charts above reveal, much of the rise in ESG
consciousness in this year’s survey stems from our
higher rate of European respondents, who tend to
be more ESG savvy. More than three-quarters (78%)
of European GPs have an established ESG program,
compared to just half of North American GPs.
As to be expected, the ESG programs of our GP
respondents are more developed than in last year’s
survey; the percentage of firms with ESG programs
that are at least two years old ballooned from 27% in
2012 to 49% this year. But the main takeaway from
the graph on the upper right is the steep drop in the
percentage of firms that do not have any sort of ESG
initiatives—from 53% in 2012 to only 25% in 2013.
North Europe
America
Do not have
ESG initiatives
Source: PitchBook
Even with substantially more PE firms having
ESG programs in 2013 than 2012, the proportion of
respondents that plan to increase their attention to
ESG issues in the future still grew from 55% in 2012
to 89% this year. With more and more LPs pushing
GPs on ESG issues, as we will explore on page 13, this
certainly seems to be the logical move for PE firms in
an increasingly competitive fundraising environment.
GP Q3: Do you plan to increase your attention to
ESG issues in the future?
100%
80%
60%
Yes
40%
No
20%
0%
2012
2013
Source: PitchBook
2013 Private Equity ESG Survey
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6

7. Why are PE firms paying more attention to ESG?
GP Q4: What factors drive your ESG efforts? (multiple choices permitted)
80%
71% 73%
70%
74%
69%
64%
55%
60%
63%
2012
60%
2013
50%
42%
45%
40%
30%
42%
36%
39%
31% 29% 29%
37%
34%
24%
24%
16%
11%
20%
10%
0%
Environ.
& social
consciousness
LPs
Risk
mgmt
Brand/
image
Corporate Portfolio
Gov’t
Employee
governance companies regulation interests
Cost
mgmt
Operational Competitors
efficiency
Source: PitchBook
Given the fact that PE firms are concerned with the
profitability of their investments first and foremost, it
seems somewhat odd that environmental and social
consciousness continues to rank significantly higher
than cost management and operational efficiency
as a driver of ESG programs. It would appear that PE
firms are not as incessantly focused on the bottomline as they are typically characterized—or perhaps
respondents are simply more inclined to display
high-minded ideals when being surveyed.
One factor directly related to the success of
PE investments that did rank highly was risk
management, with 64% of GP respondents citing it
as a contributor to their ESG efforts, up from 55% in
2012. This is corroborated by the fact that ESG issues
are considered most frequently during the due
diligence process.
Unsurprisingly, LPs continued to be a top driver of
ESG programs at PE firms, although the proportion
of GP respondents that identified LPs as being a
factor in their ESG efforts dropped slightly from
74% in 2012 to 69% in 2013. With LPs being such
an important motivator for PE firms, and our GP
respondent base being fairly attuned to ESG issues,
it is somewhat odd to see that ESG issues are only
taken into consideration by 76% of PE firms during
the fundraising process.
“It’s important that ESG management is
integrated with the overall management
of any business and not treated as a
separate or somehow less important
activity driven only by external demands.”
-Philip Rowland, Senior Operating Partner at TDR Capital LLP
GP Q5: When do you consider ESG issues?
(multiple answers permitted)
Fundraising
Due diligence
Holding period
2013
2012
Exit
0%
20%
40%
60%
80% 100%
Source: PitchBook
2013 Private Equity ESG Survey
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7

8. What needs to be included in an ESG program?
GP Q6: How important are the following factors when developing an ESG program?
Monitoring the success
of ESG initiatives
2013
2012
Developing an ESG mgmt
program at the firm level
2013
2012
Using industry guidelines
2013
2012
Engaging outside
ESG experts
2013
2012
Outlining ESG philosophy
in LP agreement
2013
2012
Requiring portfolio co’s
to develop a CSR report
2013
2012
Hiring in-house
ESG professionals
2013
2012
0%
Essential
20%
Very important
40%
Important
60%
80%
Somewhat important
100%
Unimportant
Source: PitchBook
In last year’s survey, GPs indicated that developing
an ESG management program at the firm level was
the most important factor when developing an ESG
program. While GPs saw this as even more crucial
in this year’s survey, monitoring the success of ESG
initiatives overtook it as the most important factor of
an ESG program, which makes sense with the high
priority that GPs place on metrics of all stripes. But
despite this development, finding effective metrics
to monitor ESG progress continues to be the biggest
challenge for PE firms. For firms that need guidance in
this regard, a rundown of some of the most popular
systems and resources currently available for gauging
the ESG performance can be found on page 12.
Amazingly, only 19% of GP respondents found it
to be very important or essential to outline their ESG
philosophy in limited partnership agreements, despite
76% of firms claiming to consider ESG issues during
fundraising. If a PE firm is going to invest the time and
resources into an ESG program, why wouldn’t they
want to make those efforts explicit to their investors?
Cost was identified as the biggest challenge to ESG
efforts by roughly one in five GP respondents in 2012
but cited by just 7% of respondents this year. Several
factors likely led to this decrease, such as more readily
available resources to assist in ESG efforts and the fact
that ESG programs can actually lead to cost savings.
Many GPs expressed the desire for industry
groups to provide more guidance and
standardized benchmarks for ESG metrics,
which should lead to higher prioritization
of ESG issues by both GPs and LPs.
GP Q7: What is the biggest challenge for ESG
programs and initiatives?
7%
7%
5%
9%
7%
18% 2012
24%
38%
Effective metrics
to monitor
performance
2013
42%
43%
Implementation
Cost
Employee
participation
Other
Source: PitchBook
2013 Private Equity ESG Survey
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8

9. How to share your firm’s ESG story
GP Q8: Does your firm produce a corporate social
responsibility (CSR) report?
100%
Creating the CSR Report
Who
80%
60%
Yes
40%
No
20%
0%
2012
2013
North Europe
America
Source: PitchBook
The CSR report not only articulates a firm’s ESG
program to outside parties, but also underscores
the importance the firm places on ESG issues and
highlights successes to people within the firm. The
percentage of PE firms with a CSR report—a hallmark
of a well-established and mature ESG program—
expanded from 18% in 2012 to 28% in 2013. In the
future, more PE firms will likely allocate the resources
necessary to produce the CSR report as their ESG
programs become more mature.
Examples of CSR Reports
All PE firms will take a different approach when it
comes to crafting the CSR report. Some produce
it as a standalone publication while others
incorporate it with their annual review. Here are
some examples of how the top PE firms share their
ESG stories:
KKR: 2012 ESG and Citizenship Report
Carlyle: Corporate Citizenship
CalPERS (LP): Towards Sustainable Investment
The audience for a PE firm’s CSR report will
obviously vary depending on the firm’s size and
level of public visibility, but the most crucial
audience for all PE firms will no doubt be LPs.
For firms that put in the effort to develop an ESG
program, it is imperative to clearly articulate what
the program is accomplishing to both current and
potential investors. The CSR report is the ideal
format for this and should include everything from
high-level ESG philosophies to specifics on how
ESG performance is measured and how it impacts
the firm’s investments.
What
The actual content of the CSR report will vary from
firm to firm, but there needs to be substance. PE
firms that include quantitative results in their CSR
report differentiate themselves from those that
simply have nice photos. Key details all firms should
consider in their CSR report include:
•
•
•
•
Objectives of the ESG program
General approach to ESG issues
How ESG performance is measured
Updates on specific ESG initiatives at both
portfolio companies and the firm itself
When and Where
Most firms produce a CSR report on an annual
basis, but LPs appreciate a high level of
communication from their GPs. As such, it would
also be wise to include ESG updates in quarterly
reports. Making the CSR report easily accessibly
online allows potential future investors, acquisition
targets, media outlets and other interested parties
to see the firm’s commitment to ESG issues.
2013 Private Equity ESG Survey
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9

10. Staying current with ESG developments
ESG Groups & Programs
PRI: Developed by a group of international institutional investors in conjunction with the United Nations, the PRI is a set of
six principles that guide the investment decisions for more than 1,000 signatories.
PEGCC Guidelines for Responsible Investment: PEGCC, the main lobbying group for the PE industry, developed its
Guidelines for Responsible Investment through a collaboration with institutional investors around the world and the PRI. The
Guidelines serve as a starting point for PE firms that are developing ESG programs.
ILPA Private Equity Principles: Endorsed by more than
240 investors, the ILPA’s Private Equity Principles provide
a blueprint for GPs and LPs to align their ESG efforts.
GP Q9: How do you stay abreast of developments
in ESG? (multiple answers permitted)
ESG Disclosure Framework: Over the course of 16
months, a group that included 20 PE associations, 10
prominent GPs and dozens of LPs from 11 countries
came together to create the ESG Disclosure Framework.
Published earlier this year, the document is centered
around ESG disclosures in PE investments, outlining
five objectives relating to fund due diligence and three
pertaining to disclosures during the life of the fund.
Forums, case studies
& industry events
Industry guidelines
Independent
research
Outside consultants
2013
PEI Responsible Investment Forum: The forum,
which is co-hosted by the PRI, informs PE firms on ESG
strategies that can be employed to develop better
portfolio companies.
In-house experts
2012
We don’t
0%
20%
40%
60%
80%
Source: PitchBook
GP Q10 & LP Q1: Which ESG-related groups or programs do you belong to, endorse or participate with?
(select all that apply)
60%
50%
53%
50%
40%
35%
30%
GPs
30%
33%
16%
20%
10%
2%
ILPA PE
Principles
14% 15%
12%
4%
0%
UN PRI
30%
LPs
PEGCC
Environmental
Responsible Defense Fund
Investment
Guidelines
16%
7%
0%
Global
Reporting
Initiative
0%
Business for
Social
Responsibility
Other
None
Source: PitchBook
2013 Private Equity ESG Survey
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10

11. ESG at Portfolio Companies
GPs see ESG becoming more critical in operations
GP Q11: How important are ESG issues when
exiting a company via __________?
100%
Essential
80%
GP Q12: How important are ESG issues when
implementing operational improvements at a
portfolio company?
100%
Essential
80%
Very
important
60%
Important
40%
Somewhat
important
20%
Unimportant
0%
Corporate Secondary
acquisition buyout
Very
important
60%
Important
40%
Somewhat
important
20%
Unimportant
0%
2012 2013
IPO
Source: PitchBook
PE firms have changed their tune in the last year when
it comes to utilizing ESG initiatives at their portfolio
companies. Thirty-one percent of GP respondents
this year said that ESG issues were essential or very
important when looking to improve portfolio company
operations, compared to just 18% in 2012. European
GPs were much more inclined to find ESG issues to be
an important factor in portfolio company operations,
with 86% saying they were at least important.
With the scrutiny that comes with being a public
company, GP respondents found ESG issues to be
significantly more important for companies being
exited via IPO as opposed to a sale to corporate
acquirer or another PE firm. ESG issues were found to
be least important when selling to another PE firm,
which was somewhat surprising given the relatively
high level of ESG focus and awareness indicated from
respondents throughout our survey—particularly
when performing due diligence.
Much of the effort around ESG programs centers
around initiatives that can cut costs, improve efficiency
and enhance the operations of the portfolio company,
but philanthropic and volunteer programs are an
North Europe
America
Source: PitchBook
GP Q13: Do you have philanthropic and/or
employee volunteer programs at your portfolio
companies?
100%
Yes; they are
required
80%
60%
Yes; they are
encouraged
but not
required
40%
20%
No
0%
2012
2013
Source: PitchBook
ideal way to engage employees from across the
organization. To that end, more than half (52%) of GP
respondents encourage these types of initiatives at
portfolio companies but hardly any (2%) make them a
requirement.
2013 Private Equity ESG Survey
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11

12. How do GPs monitor ESG at portfolio companies?
GP Q14: Do you require portfolio companies
to use a systems approach to manage
environmental performance?
100%
Yes; ISO
certification
required
80%
60%
Yes; other
type of
certification
40%
20%
No
0%
2012
2013
North Europe
America
Source: PitchBook
“Our next initiative around awareness is
bringing our portfolio companies together
to share best practices in ESG, discuss the
issues and opportunities and re-confirm our
expectations for management of this area”.
-Philip Rowland, Senior Operating Partner at TDR Capital LLP
GP Q15: Do you require portfolio companies to
develop a CSR report?
100%
Yes
80%
No; but
currently
working
towards
it
60%
40%
20%
Commonly used
ESG rating systems
International Organization for
Standardization (ISO)
Recognized as an international leader in
voluntary standards systems, ISO standards
address a vast array of ESG issues, including
energy and environmental management and
social responsibility. ISO develops its standards
through a consensus process that draws on
experts and industry professionals from around
the globe. The organization has published more
than 19,500 International Standards since its
inception in 1947.
Global Impact Investing Rating System (GIIRS)
Initiated as a project by B Lab, an independent
non-profit organization, GIIRS assesses the social
and environmental impact of both funds and
individual companies. GIIRS utilizes third-party
documentation and ratings methodologies
developed by an independent Standards Board.
One of the biggest advantages to using a thirdparty system is that it addresses the diverse nature
of companies and funds by evaluating them on a
range of criteria pertaining to specific industries,
impact areas and investor preferences.
Impact Reporting and Investment
Standards (IRIS)
Developed by the Global Impact Investing
Network (GIIN), IRIS is a catalog that offers
standardized metrics that can be employed to
measure social, environmental and financial
performance. Some of the specific variables that
IRIS can help quantify include: governance, social
policies, employee training, greenhouse gas
emissions and biodiversity.
No
0%
2012
2013
North Europe
America
Source: PitchBook
2013 Private Equity ESG Survey
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12

13. The LP Point of View
LPs care more about ESG issues than ever before
LP Q2: How important are ESG issues when
evaluating a GP and deciding to commit to a fund?
GP Q16: How important are ESG issues when
drafting limited partnership agreements?
100%
100%
Essential
Essential
80%
80%
Very
important
60%
Important
40%
Somewhat
important
20%
Unimportant
0%
2012 2013
North Europe
America
Very
important
60%
Important
40%
Somewhat
important
20%
Unimportant
0%
2012 2013
Source: PitchBook
North Europe
America
Source: PitchBook
As was the case in 2012, LPs continue to indicate a
high level of concern regarding ESG issues. The results
largely mirror those from last year, but the LPs that
were simply interested in ESG issues last year are
beginning to view them as essential. Nearly one in five
(18%) LP respondents reported that ESG issues were
essential when evaluating GPs while last year not a
single LP fell into this category. European LPs, like their
GP counterparts, are particularly concerned with ESG;
every European LP respondent said that ESG issues
were at least important when committing to a fund.
GPs are more attuned to the ESG concerns of LPs
than they were last year, but there is still room for
improvement, with 27% of GP respondents saying
LP Q3: How has your focus on ESG issues changed
in the last three years?
GP Q17: Have LPs expressed increased concern
about ESG issues in the last three years?
100%
100%
80%
Increased
60%
80%
60%
Stayed the
same
40%
Decreased
40%
Yes
20%
20%
No
0%
2012
2013
North Europe
America
Source: PitchBook
0%
2012
2013
Source: PitchBook
2013 Private Equity ESG Survey
www.pitchbook.com | demo@pitchbook.com
13

14. LP Q4: How do you expect your focus on ESG
issues to change in the future?
100%
LP Q5: Why does ESG matter in your investment
decisions? (multiple choices permitted)
Risk management
Brand/image
80%
Increase
60%
Stayed the
same
40%
Environmental/social
consciousness
Corporate governance
Government
regulation
Employee interests
2013
Competitors
20%
Decrease
2012
Other
0%
It doesn’t
2012
2013
North Europe
America
0%
20%
40%
Source: PitchBook
60%
80%
100%
Source: PitchBook
that ESG issues are unimportant when drafting limited
partnership agreements.
Sixty-two percent of LP respondents say that their
focus on ESG issues has increased in the last three
years, with just one respondent saying that they are
less concerned with ESG issues than in the past. GPs
appear to be getting the message loud and clear. In
2012, only half of GP respondents said that LPs had
expressed increased concern over ESG issues, but that
surged to 77% in this year’s survey.
Even though LPs have shown significantly more
attention to ESG issues in recent years, 60% of LP
respondents said they will continue to increase their
focus in the future. This should only serve to motivate
GPs to build out their ESG programs even faster.
Environmental and social consciousness ranks
highly among LPs as a motivator to address ESG issues,
but they are also concerned with the risk profile of
their investment and their brand and image. Corporate
governance, business integrity, and environmental
health and safety were the main concerns of LPs when
it came to specific ESG issues. Interestingly, European
were much more inclined to care about social issues,
which was their second highest concern.
LP Q6: What areas are you most concerned about
when it comes to ESG? (limit three)
LP Q7: Would you rather commit to a GP with no ESG
program but top quartile performance or a GP with a
strong ESG program and slightly lower performance?
Corporate
governance
100%
Business integrity
80%
Environmental
health & safety
60%
Social issues
Climate change
2013
Resource
preservation
2012
Other
None
0%
ESG program
& lower
performance
40%
No ESG
program &
higher
performance
20%
0%
20%
40%
60%
Source: PitchBook
80% 100%
Source: PitchBook
2012
2013
Source: PitchBook
2013 Private Equity ESG Survey
www.pitchbook.com | demo@pitchbook.com
14

15. Industry Leaders
As part of this year’s survey, PitchBook asked respondents to name some of the firms they viewed as leaders in
ESG practices. It was encouraging to see firms of all different sizes and from both sides of the Atlantic be named,
but there were two clear industry leaders­ KKR and Doughty Hanson. KKR was the most frequently named
:
leader in ESG practices in both this and last year’s survey, which is no surprise considering the firm initiated its
Green Portfolio Program in 2008 and maintains an ongoing partnership with the Environmental Defense Fund.
Doughty Hanson, a London-based European private equity firm, wasn’t mentioned in last year’s survey, but was
cited as a leader by several firms and LPs this year. Here’s a look at what makes each firm so respected among
their peers when it comes to ESG issues:
http://green.kkr.com
http://www.kkr.com/company/responsibility
KKR was the firm most frequently named as a leader
in ESG practices for the second year in a row. The
firm launched its Green Portfolio Program in 2008 to
generate operational improvements at its portfolio
companies. The program was created in partnership
with the Environmental Defense Fund and focuses
its efforts on reducing emissions, electricity usage
and other environmentally focused operational
improvements. KKR estimates that through its first five
years the program has generated $917 million in cost
savings and additional revenue.
According to KKR, 25 companies have participated
and avoided more than 1.8 million metric tons of GHG
emissions since the program’s inception. Also included
on the Green Portfolio Program website are numerous
case studies and statistics that show the impact of
the firm’s ESG programs. For example, KKR portfolio
company Oriental Brewery, which installed a modified
boiler system and optimized the fermentation
processes in-house, reported that from 2008 to 2010,
the company avoided $17.7 million in energy costs
and 19 million cubic meters of water consumption.
KKR also operates initiatives at its portfolio
companies to improve transparency, employee health
and sourcing practices and supply-chain risks.
http://www.doughtyhanson.com/responsible-investing.aspx
http://www.doughtyhanson.com/private-equity/esg-engagement.aspx
Doughty Hanson has been active in ESG issues and
practices for several years and became the first PE
signatory to the PRI in June 2007. The London-based
PE firm was also one of the first to produce an ESGfocused report, partnering with the World Wildlife
Fund in 2011 for “Private Equity and Responsible
Investment.”
On its website, the firm includes a list of ESG
policy items it seeks to achieve, a case study for
one of its portfolio companies, details on its own
carbon neutrality efforts, and information on social
investment and charitable efforts.
As was the case for many of the GP respondents
to our survey, Doughty Hanson sees undertaking
ESG issues not as a burden, but as a way for the
firm and its portfolio companies to enhance value,
elevate the brand and reduce risks associated with
poor governance. According to the firm, the projects
it undertakes are: “commercially driven and are
designed to mitigate the financial and reputational
risks to which Doughty Hanson, our portfolio
companies and our investors are exposed. They also
create additional opportunities to increase the value
of our portfolio companies, enhance their brands
and better position them for exit.”
2013 Private Equity ESG Survey
www.pitchbook.com | demo@pitchbook.com
15

16. PitchBook
Bet ter Data. Bet ter Decisions.
PitchBook for Private Equity Firms
1.877.267.5593 demo@pitchbook.com
pitchbook.com
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