The UK’s Co-operative Asset Management has formed a partnership on environmental, social and governance (ESG) factors with private equity giant Kohlberg Kravis Roberts & Co.
The Co-operative Asset Management runs eight funds with £19bn (€22.4bn) under management and is part of the Co-operative Group, the UK’s largest consumer co-operative.
“We’ve agreed to contribute funding as a Limited Partner towards projects including joint ventures and buy-outs that have promising environmental, social and governance (ESG) potential,” the Co-operative Asset Management said.
Companies where KKR and the Co-op are involved can “derive business benefits by driving up ESG standards”. The Co-op argues that private equity will be crucial in providing funding to early-stage companies that will offer clean energy and water.
The remarks come in the Co-op’s winter 2010 Responsible Investments Quarterly Review. Both the Co-op and KKR are signatories to the United Nations Principles for Responsible Investment.The Co-operative Asset Management was the first UK investor to publish its voting record on its website in 2002. KKR, founded in 1976, is known for its role in the leveraged buyout of US food group RJR Nabisco that was documented in the 1990 book “Barbarians at the Gate”.
In 2009 it was instrumental in forming a series of ESG guidelines with the Private Equity Council. It also runs a Green Portfolio Program.
Meanwhile, the Co-operative Asset Management also disclosed that it has reviewed its fixed income holdings for sustainability factors.
It said: “During the last quarter of 2010 we significantly deepened our consideration of sustainability regarding fixed income, undertaking a review of our holdings as well as stepping up bond engagement and investigating new product options.”
The driver for this comes from both the financing requirement for the transition to a lower carbon economy and the changing nature of demand for financial products.