Creating Sustainable Value

September 2011

2

Who is KKR?

3

A Growing Institution

200

400

600

1976 Today

Henry R. KravisKKR Co-Founder

George R. RobertsKKR Co-Founder

Nu

mb

er o

f Em

plo

yees G

lob

ally

Management Committee

Portfolio Management Committee

Approximately 800 People

Offices in 14 Major Cities

180+ Investment Professionals

Investment Committee

800

4

Diverse Portfolio of Companies Around the World

(1) As of December 31, 2010. Excludes transactions closed after that date. East Resources was fully realized in Q4 2010.

North America

Asia

Europe

KKR Debt Investors

Hilcorp

Resources

Texas Crude Energy

5

Why is ESG important to us?

6

Our own investors care

UN Principles for Responsible Investment (UNPRI)

743 investors representing a collective capital of USD 25 trillion

The investors have committed to :

“To integrate consideration of environmental, social and governance issues into investment decision-making and ownership practices, and thereby improve long-term returns.”

“At AlpInvest Partners, we promote the integration of ESG in investment processes as well as increased transparency in the private equity industry….”

— Maaike van der Schoot, AlpInvest Partners

“AXA Private Equity considers ESG issues to be a core component of its investment philosophy and believes that compliance with the UNPRI will result in superior investment performance….”

— JérémieDelecourt, Director Corporate and International Development, AXA Private Equity

7

Our Own Private Equity Portfolio Companies Care

“Sustainability issues will

be critical to the future

success of our business”

93 percent of CEOs believe that sustainability issues will be critical to the future success of their business*

* According to “A New Era of Sustainability: UN Global Compact-Accenture CEO Study 2010.”** Sample of KKR portfolio company recognition and awards

Leadership Within the Portfolio**

“Gold Winner: Corporate Responsibility” – CIPR Awards

First Asian Company in Green Portfolio Program

“Best 100 Companies to Work For” – The Sunday Times (UK)

Improving Quality and Safety

8

Managing these issues effectively is critical to smart investing

“We consider ESG issues not only because it makes us good citizens, but because we believe that thoughtful management of these issues is critical to value creation….

“Our approach focuses on creating shared value through initiatives that benefit our limited partners, our portfolio companies’ employees and their bottom lines, as well as other stakeholders, the environment and society in general.”

George R. Roberts and Henry R. Kravis

9

Our approach to creating sustainable value

10

The Private Equity model and ESG

Note: ADAPTED FROM A SPEECH BY MARCO PAGNI, ALLIANCE BOOTS GENERAL COUNSEL, TO THE BRITISH VENTURE CAPITAL ASSOCIATION, NOVEMBER 2010

Long-term perspective

Active ownership

Communities of practice

“…We no longer have a share price to worry about and we are able to make decisions to create value in the long term rather than needing to focus on quarterly reporting….”

“…One of our owners leads the business and both owners are easily accessible to talk about strategy and implementation…”

“…our CSR activities have increased in scope and intensity since privatization and KKR has involved Alliance Boots in its Green Portfolio Program.”

11

Integrating ESG in the investment process

PRE-INVESTMENT

Identifying potential risks

and opportunities

STEWARDSHIP

Setting expectations

and partnering with portfolio companies

Realizing value

ESG risks and opportunities assessed and addressed

12

Identification

Evaluation

Targeting

Identifying risks and opportunities

Integrating ESG

• Investment professional competencies

• New employee orientation

• Firm-wide meetings

• Guidance tools and resources

• Industry issue-spotter lists

• ESG-focused diligence

Less than

40%are

submitted for evaluation

Less than 2% are targets

Pre-Investment Phase

13

ESG in the Stewardship phase

Defining priorities

•100 day plan

•On-going oversight

Setting expectations

•Management of material ESG issues at the board

Communities of practice

•A greener portfolio

•Responsible sourcing

•Communicating to stakeholders

Integrating ESG in

Stewardship

14

The Green Portfolio Programme

• 16 companies globally

• Collaboration with Environmental Defense Fund following our successful collaboration during the acquisition of TXU

• Assessing, measuring and optimizing performance to help the companies manage their environmental impacts for environmental and financial benefits.

IMPACT OF THE GREEN PORTFOLIO PROGRAMME 2008 AND 2009

Aim to involve 22 companies by 2012

15

Responsible sourcing

• Initiative to work together to develop effective tools to address sustainability challenges in the supply chain

• Collaboration withBusiness for SocialResponsibility

• Development of a “Supply Chain Sustainability Resource Guide”

• Workshops covering best practices, international standards, industry collaborations, certification processes and resources etc.

Aim to have the majority of high priorityportfolio companies with policies

on supply chain sustainability by 2012

16

• We encourage:

• Compliance with voluntary codes and frameworks on reporting

• Integration of financial and sustainability reporting where appropriate

• Reporting on material sustainability issues to the board

• 35% ofportfoliocompanieswere publicly communicating or beginning to communicate their sustainability performance in 2010

Engaging with Stakeholders

Aim to train a majority of our non-reporting portfolio companies on best

practice reporting by 2012

Integrated reporting at VGG

Integrated its ESG report with financial reporting.

VGG reached GRI A+ status for its 2010 report.

First-time reporting

Outlined its commitment to environment and society in its 2010 Annual Report: “The Future is Efficient.”

17

Our first sustainability report

18

Developing a stakeholder-responsive report

To develop a report with value to both our stakeholders and our business, we engaged with a group of stakeholders and experts in order to define our material issues and help us develop a report that is responsive to expectations.

They wanted to see:

• A focus on how we integrate ESG in the investment process

• Goals and key performance indicators

• Case studies

• Integrated reporting

• Challenges as well as achievement

19

Communicating on our most material issues

20

The beginning of a journey

“While we are not flawless and we may make choices that do not satisfy everyone, we are committed to considering these issues and managing them responsibly. It starts with our private equity investment decisions, continues through the work we do with our portfolio companies and culminates in the value that we create for our investment partners, our portfolio companies and the communities in which they operate.”

Creating Sustainable Value – KKR 2010