Responsibility
“Our core values—respect, integrity, innovation, and excellence—are the foundation of everything we do at Kohlberg. Preserving and nurturing this foundation, while delivering strong, consistent returns for our investors, remains our guiding ethos”
— Sam Frieder
Since 1987, Kohlberg has been dedicated to investing with integrity to build long term value in middle market companies in the United States. Kohlberg’s longstanding mission is to invest in high-quality businesses with defensive market characteristics, to embrace a disciplined, conservative approach to risk management, and to capitalize on value creation opportunities. Kohlberg seeks to leverage Environmental, Social and Governance (ESG) considerations in ways that are consistent with this mission and our fiduciary duty to generate long-term value for our investors.
Our objective is to make investment decisions based on a full set of risk-reward factors, and we view ESG opportunities and risk factors as a part of the potentially material inputs into our investment process. We believe that taking into account these considerations can help to mitigate potential risks and realize value creation opportunities, both of which contribute toward top-performing investments with consistent returns.
Governance
Accountability extends throughout our Firm, with oversight residing with a cross-functional committee. The committee, composed of senior leadership and other senior deal and operations professionals, oversees the Firm’s responsibility strategy and policy implementation and tracks performance improvements over time.
Our Commitment to Invest Responsibly
Differentiated Sourcing
ESG is part of our thesis-driven approach for investments
Weekly Deal Flow
Kohlberg's Head of Sustainability participates in our weekly pipeline deal review, serving to flag any identified major ESG risk
Due Diligence
Thorough due diligence on material ESG risks and opportunities complemented by third-party subject matter experts
Approval
Investment Committee considerations include ESG risk factors and opportunities supported by internal and third-party diligence
Onboarding
Portfolio company onboarding includes ESG training, an outline of Kohlberg’s expectations and the establishment of an ESG Committee
Monitoring
The first step is establishing a baseline and considering which ESG-related considerations are material for the portfolio company, followed by establishing an ESG strategy and roadmap. Progress is tracked through annual surveys and a dashboard, with results reviewed by management and reported to Limited Partners and the board
Exit
The collected ESG analysis and reports are shared with potential buyers at exit, and are integrated into our exit process. We believe mature ESG businesses are rewarded regardless of the exit path
Climate Considerations
Climate change can present opportunities and vulnerabilities to diverse portfolios like ours. We aim to support portfolio companies to identify and capture value-accretive opportunities. We do not take a one-size-fits-all approach.
We meet our portfolio companies along their respective journeys and help them pursue their decarbonization goals, which often are driven by the need to comply with regulatory or customer demands.
For PMDR Mapping see here.