By Ken Mehlman, Robert W. Antablin
Submitted by KKR
We recently published our annual Global Impact Summary Report, which reviews key developments in our Global Impact strategy, launched in 2018 with the goal of investing behind scalable, commercial solutions that seek to solve global challenges. When reflecting on the Global Impact strategy, we thought it would be useful to examine macro trends, our investment themes and lessons learned along the way.
Macro Trends: Last year we noted that COVID served as a reminder of the importance of preparation and the need to build more sustainability, resilience, and equity across societies. In our judgment, Russia’s unprovoked attack on sovereign neighbors in Ukraine and its fallout this year reinforces some of these needs, as do supply chain and worker shortages plaguing many industries. The Russian assault has amplified a number of investment trends we have been following closely. For example, European leaders have accelerated their commitment to the energy transition; countries around the world have started to focus even more on building local supply chains for key products and services; worker shortages for key functions reinforced the need to upskill and reskill the global workforce; and cyber vulnerabilities came into even greater focus as a result of the war.
Investment Themes: We also reflect on recent trends related to our four key investment themes: climate action, sustainable living, lifelong learning, and inclusive growth. We have noted before the resilient nature of our investment themes, which are buoyed by governments, companies and consumers.
The regulatory requirements on climate action and other ESG priorities accelerated in 2021. In March 2021, the European Sustainable Finance Disclosure Regulation went into effect, setting a foundation for increased investor disclosure on ESG-related data. In the United States, the SEC proposed new disclosure rules on climate for public companies and on investment practices related to “ESG funds.” In addition to their effect on our own work, if adopted, these rules are likely to reinforce the importance of corporate ESG commitments, another component of the macro tailwinds behind our investment themes.
Lessons Learned: We have a deep and long-held commitment to being an active member of the impact investing community. As such, we look to learn and share insights more broadly, including those below.
Use of platforms to scale impact: When we established the Global Impact strategy in 2018, our thesis was that by investing in proven business models we could both create value and maximize positive societal impact. One way we have achieved this has been through thoughtful mergers and acquisitions and positioning our companies as platforms to support the scaling of impact. Today we are focused on building experience in critical components of the operational, cultural, and leadership tools needed to successfully merge existing enterprises.
*This 2021 Global Impact Summary report presents an overview and highlights from our full 2021 Global Impact Report, which is provided to Global Impact limited partners only, and includes all companies in Global Impact’s portfolio as of March 2022. Impact and ESG data are cumulative since investment as of December 31, 2021, unless otherwise noted.
KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group . References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com and on Twitter @KKR_Co.
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