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Green Ops for PE: A Program to Make Private Equity Firm Portfolios Sustainable

How green is your portfolio? If the Environmental Defense Fund has anything to say on the matter, it’s about to get a whole lot greener.

New York street

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Companies listen to the private equity firms that invest in them. So it stands to reason that the Environmental Defense Fund could green more companies faster by working with these firms than by working with individual companies. That’s the idea behind Green Ops for PE, a pilot program that will create an assessment process to help firms make their portfolios more sustainable.

The program, launched as part of a partnership with Ernst & Young, will help one lucky firm identify key opportunities where the environment can drive better operational and financial performance. Ultimately, the EDF hopes to come out of the pilot with a framework for working with other private equity firms.

“We’re beginning to see a shift in private equity industry. More and more
leading firms are no longer asking why they should be concerned about
environmental and social issues. We’re eager to find a way to capitalize on this growing interest,” explains Tom Murray, Managing Director of Corporate Partnerships at the EDF.

The EDF has been working with private equity firms KKR and the Carlyle Group since 2008 on improving the environmental performance of their portfolios. Both initiatives have been extremely successful. The KKR Green Portfolio Program, for example, includes 16 portfolio companies and has shaved off $160 million in operating costs, 345,000 metric tons of CO2 emissions, 8,500 tons of paper, and 1.2 million tons of waste. In one initiative with U.S. Food Service, a member of KKR’s portfolio, the EDF increased fleet fuel efficiency by 4 to 5% by leveraging low to no-cost opportunities, including speed control, reduction of idling times and driver training.

And last year, the EDF and Carlyle unveiled EcoValuScreen, a due diligence tool that hunts down sustainable cost-saving opportunities for companies.

The EDF and Ernst & Young haven’t selected a pilot firm for the Green Ops program yet, but they will be looking soon. According to Murray, there is just one requirement: “We want a firm that’s willing to be the guinea pig, do this with us in an open
source way so we can learn from the process and improve it.”

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Ariel Schwartz can be reached on Twitter or by email.

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About the author

Ariel Schwartz is a Senior Editor at Co.Exist. She has contributed to SF Weekly, Popular Science, Inhabitat, Greenbiz, NBC Bay Area, GOOD Magazine and more

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