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In a world where flexible packaging is everywhere and hardly any of it is recycled, a small social enterprise in India — founded by none other than my little brother, Anish Malpani — says it has cracked the code.

Flexible packaging is almost uniformly single-use and is the most challenging market segment to address toward realizing a circular economy for plastics. Due to its low weight, low cost and high functionality, flexible plastic packaging is used for almost everything — fresh fruit, meat, dry food, confectionary, drinks, personal care products, stationery items, tools, electronics and more — making it the fastest growing category of plastic packaging.

Launched two years ago, Ashaya is a social enterprise based in Pune that has managed to recycle this hard-to-recycle, multi-layered plastic packaging (MLP) into high-quality material.

 “We are recycling post-consumer metalized multi-layered plastic packaging (MLP) — i.e. packets of chips, chocolate wrappers and so on — unfiltered. As in, we don’t pick and choose what MLP to recycle — we recycle all of it,” says Anish, founder of Ashaya. 

Recycling what’s impossible to recycle

Globally, near 0 percent of flexible packaging is recycled. In other words, practically none of it. This is because flexible packaging results in a low-value, high-volume composite waste — containing up to five or six different materials — that is considered economically and technically to be nearly impossible to recycle. It ends up in landfills and accounts for a disproportionate share of leakage into the ocean worldwide.

“Eighty percent of all leakage into the oceans is flexible packaging," Anish says. "We’ve found a way to extract materials from this packaging and upcycle it into high-quality, largely consistent materials and products that are more recyclable than the original chip packet. The material properties we have been able get are almost virgin-like, and its applications are boundless."

Ashaya's team has spent the last two years experimenting in their lab in Pune and has found a way to not only recycle flexible packaging, but also reinvigorate it. They chemo-mechanically extract materials from this waste using a patent-pending technology and use those materials to create sunglasses, the company's first proof-of-concept product. Each pair of sunglasses is made of five chip packets. 

“These will probably be the most sustainable products you’ll own, both environmentally and socially," Anish says. "They’re also highly functional as they are comfortable to wear; light and won’t break even if you drive a car over them!” 

Going to the consumer goods market to start with was a bold move. “We were able to go to the consumer market because we have complete vertical integration of our operations — from shredding the waste, to cutting the lenses of our sunglasses, to selling them on our website,” Anish explains. “This has proved to have more benefits than we imagined. It has enabled us to minimize dependencies on external stakeholders, allowing us to trot along no matter what happens.”

Owning the supply chain: From trash to market

What's more, Ashaya has hired its own waste pickers in Pune so the company owns the entire supply chain, from trash to market. 
“We buy waste directly from waste pickers and pay a premium for it," Anish says. "Most importantly, we formally incorporate them into our supply chain. We have hired five waste-pickers so far part-time, whose monthly income has increased by an average of 120 percent."

It is estimated that India generates 65 million tons of waste each year and is home to more than 4 million informal waste pickers who are marginalized and at the bottom of the socio-economic chain. Ten percent of Ashaya sales go toward keeping the children of waste pickers in school to assist them in breaking out of the poverty cycle. 

Contributing to circular economy for plastic

To create a circular economy for plastic, we must eliminate the use of unnecessary plastic and innovate to make the plastics we do need recyclable, reusable or compostable.

Ashaya is able to do all of this. By recycling and repurposing flexible packaging that has long plagued the environment, the company is not only creating a more sustainable world, but also transforming the lives of some of India's most underrepresented people. 
The long-term goal for Ashaya is to scale the quantity of material it can produce. “We are still tiny," Anish says. "We have two small labs in a space of 1,200 square feet, so we cannot do large volumes. No one wants to buy 10 kilograms of material, they want 10 tons. At our current rate of production, that would take us 10 years. Our next step is to raise funds to take our technology from a micro-pilot plant to a full-scale pilot plant to demonstrate the viability of what we are trying to achieve.”

I personally think my brother’s story warrants a film: Indian boy quits high-flying career in Manhattan to move back to India and make a change. Not the Bollywood kind! A documentary series of his journey from being a finance director at a radio station in New York to finding his purpose as a social entrepreneur in India. Although he launched his company two years ago, it took him five years before that to find his calling whilst he travelled the world working in social enterprises and NGOs in Guatemala, Kenya and India.

I am so proud to see my brother evolve into a true innovator, entrepreneur and social champion who has chosen to dedicate his life to address some of the world’s most pressing challenges. 

Images courtesy of Ashaya 

It’s springtime in Washington, D.C. The weather is getting warmer, the cherry blossoms have bloomed, and global leaders are descending upon the nation’s capital for the World Bank Group and IMF Spring Meetings, where they will take on the evolving role of multilateral collaboration in solving global challenges like economic inequality and climate change.

Alongside these meetings, the Mastercard Center for Inclusive Growth and the Aspen Institute will host the 2023 Global Inclusive Growth Summit, assembling leaders to shine a spotlight on the power of the private sector to drive scalable and sustainable impact, in partnership with government and social sectors. 

The event, which will be livestreamed to a global audience, will take place on Thursday, April 13, from 10:00 a.m. to 4:00 p.m. With more than 15 sessions featuring over 30 speakers and thought leaders, there are so many reasons to tune in — but here are our top five. 

1. Get inspired by transformational business leaders talking about real-world impact

Hear corporate CEOs like Verizon’s Hans Vestberg, Chobani’s Hamdi Ulukaya, and Mastercard’s Michael Miebach share how their companies are using their expertise and networks to help tackle global challenges like the digital divide and the global refugee crisis.

2. Learn how influencers are using their platforms to advocate for inclusion

Today, there are 1.8 billion people between the ages of 10 and 24 — the largest generation of youth in history. Trevor Noah and Lilly Singh will speak about using their unique talents and perspectives to empower youth to foster inclusive growth from the ground up. 

3. Understand what it will take to collectively advance progress toward gender equality

Research shows that women are powerful drivers of global development and economic growth. Yet, at current rates, women will not achieve economic parity until 2154.  Global philanthropist Melinda French Gates will join Trevor Noah in a conversation about women’s economic power, envisioning a world where women and men contribute and benefit equally from prosperity, and sharing their perspectives for accelerating progress.

4. Get a past and present view of the impact of climate change on communities

To understand the consequences of climate change and how it is exacerbating inequality, we need to know what it’s like on the front lines of the most impacted populations. Join Hindou Ibrahim, president of the Association for Indigenous Women and Peoples of Chad, as she shares her perspective on what it will take to protect people and the planet from climate change.

5. Explore the evolving role of public-private partnerships to digitize the last mile

Digital technology is starting to be woven into everyday life, from rural farms and medical clinics to schools and businesses. Ensuring technology brings transformative change that improves lives and livelihoods requires intention and innovative partnerships. Take part as Samantha Power, administrator of the U.S. Agency for International Development (USAID), and Mastercard Vice Chairman Mike Froman discuss how the public and private sectors can work together to build a trusted digital ecosystem that supports democratic principles and fosters inclusive and sustainable economic development.

For a closer look at the speakers and topics in store, check out the complete 2023 Global Inclusive Growth Summit agenda and register here. 

Image courtesy of the Mastercard Center for Inclusive Growth

The latest report from the Intergovernmental Panel on Climate Change (IPCC) outlines the widespread impacts and risks of climate change. The findings are grim: Global surface temperature has risen 1.1 degree Celsius above pre-industrial levels, and greenhouse gas emissions have continued their upward trajectory. Global governments are failing to meet their commitments to curb emissions, and current nationally determined contributions (NDCs) have the world on track to shoot past 1.5 degrees within the 21st century, making it far more difficult to limit warming to below 2 degrees.

As civil society fails to curb emissions and avoid the most catastrophic outcomes of the climate crisis, the private sector has an opportunity to drastically decrease emissions and lead the way to a decarbonized world.

TriplePundit spoke with Steve Varley, global vice chair for sustainability at the big-four accounting firm EY, about the ways the private sector can help change the current climate trajectory and create long-term sustainable value.

“The IPCC report is not the first time that we've heard a claxon and seen the red flashing lights in a report done by eminent and prestigious scientists on the climate emergency," Varley said. "We are not acting appropriately in business or government in response to the report. Capitalism can be a powerful agent, and if we can help stakeholders create value by becoming more sustainable, then the world will be more sustainable. The private sector can help close the gap on climate response when national governments are struggling to meet the expectations of a 1.5-degree pathway.” 

The fight against climate change and the road to COP28

The latest IPCC report is framing the global conversation leading up to the U.N. COP28 climate talks in December. Current NDCs — the formal term for country commitments to reduce emissions — put the world on track to see temperature increases between 2.2 and 2.4 degrees Celsius. And some governments are failing to implement their current emissions reductions strategies.

 “We should be tracking how countries improve their NDCs, if at all, on the way to COP28, especially for the G20," Varley said, referring to the Group of 20 of the world's largest economies. "I am encouraged by where the U.K. is getting to, but all eyes are on the United States, India, China and Saudi Arabia. We need to move from pledges and promises to progress and performances.” 

At the COP27 climate talks last year, the Joe Biden administration acknowledged that the public sector could not provide adequate financing to fund the transition to a decarbonized economy. A senior advisor to President Biden noted that the world needs the private sector to help unlock trillions of dollars of climate finance needed to avert the worst effects of the climate crisis, but currently, only a small fraction is available.

“As governments shrink away from meeting their commitments on their NDCs, now is the time for the private sector to step forward," Varley noted. "For those parts of the world where there is a trust gap between civil society and business, this is our opportunity to walk the talk and show how we are decarbonizing at scale. We should come to COP28 with evidence to civil society how we are closing the gap and decarbonizing our businesses.”

Where do businesses go from here? 

The business case for sustainability is increasingly apparent for the private sector, and there are several ways that companies can create value for stakeholders and engage the public. “Sustainability is the defining challenge for businesses and business leaders over the next decade, and we need to address it proportionately," Varley said. "Capitalism can, on occasion, wreak havoc on the world, but if we bring the power of the private sector as a change agent to the world, we can make the planet more sustainable. To do that, we have to encourage the creation and protection of value.” 

Additionally, the IPCC report needs to be made more available to folks outside of the sustainability sectors. “The private sector needs to translate the IPCC report into everyday descriptions so that civil society can better understand how not dealing with climate change will  impact their lives and the lives of their children," Varley told us. 

The world is running out of time to act, and the next few years are critical. Governments must continue to support policies that allow for the flow of climate finance. “It’s difficult when politics does not support the climate change agenda, but the private sector is embracing and responding to the climate emergency,” he said.

“There is a quote that I like, that is often attributed to Napoleon: ‘The job of a leader is to establish reality and then give hope,’" he continued. "COP28 can establish realistic optimism and realistic hope. I am optimistic, because I see the great work in many companies around the world to decarbonize. Businesses can start the movement to overtake governments’ efforts to decarbonize at a national scale and close the gap.” The IPCC report notes that at current rates of implementation, adaptation gaps will continue to grow and that an influx of climate finance is necessary to avoid catastrophe. 

Image credit: Roxanne Desgagnés/Unsplash

Indigenous innovation is reshaping the burgeoning clean energy industry and empowering native communities in the process. Seneca Solar, a climate consultancy and solar developer wholly owned by the Seneca Nation, is expanding its strategic partnership with Alternative Energy Development Group (AEDG), a developer of commercial and industrial clean energy projects, to advance renewable energy developed and controlled by Native communities. 

The mission of Seneca Solar is to profitably and equitably deliver innovative climate solutions that heal the Earth. The expanded partnership with AEDG is dedicated to reversing the extractive model of energy development on Native lands so these communities can gain energy sovereignty through participation in the clean-energy economy.

“Values-aligned partners like AEDG are helping Seneca Solar rapidly deploy renewable energy projects at speed and scale," Matt Renner, vice president of business development at Seneca Solar, told TriplePundit. “We see an opportunity for unprecedented collaboration between the renewable energy sector and Native communities — in the U.S. and around the world — to build renewable energy projects for the benefit of historically underserved communities and all future generations."

In the past, energy development on Native lands has mostly been extractive. Polluting fossil fuel power plants were sited in Native communities with little cleanup. Even with renewable energy development, ownership and other financial benefits were reserved for developers, leaving Native communities on the sidelines of the clean-energy economy. "The expanded partnership [with AEDG] will help build the capabilities of Seneca Solar so we can support more Native communities in developing and owning renewable energy projects,” Renner said. 

In collaboration with Native communities and partners, Seneca Solar is flipping the old, extractive model of energy development to focus on equitable outcomes for Native people. 

“Most developers who engage with Native communities are focused on profit and volume above empowerment of the communities they work with,” Renner told us. “We’re offering a new way of deploying renewable energy that benefits Native communities, leveraging the opportunities under the Inflation Reduction Act and the Biden administration’s Justice40 initiative.”

Seneca Solar aspires to engage in collaborative, fair partnerships that create real community benefit, as determined by the communities it works with, Renner said. Opportunities are presented upfront, with Native communities prioritized and included in negotiations as partners in development. Equity ownership and other financial options and benefits are available to Native communities, creating long-term value.

Seeking energy sovereignty

Energy sovereignty refers to the right of communities to make their own decisions about energy generation, distribution, and consumption in a way that is appropriate for them — something that Native communities have not had opportunities to do in the past. About 14 percent of households on U.S. Native lands don’t even have access to electricity. 

“Because energy affects everything we do, it is a critical component of community sovereignty. Achieving energy sovereignty will help Native communities gain greater self-sufficiency and prosperity for all their people,” Renner said. “Participating in the clean-energy economy will allow them to enjoy the financial and environmental benefits of renewable energy, which have previously been largely unavailable to them.”

Native communities, since the first days of the Industrial Revolution, have warned against the destruction and pollution of our natural surroundings. By positioning itself as a leader in the clean energy sector, Seneca Solar stands to promote planet-friendly concepts that can foster a wider environmental awareness.

“At Seneca Solar, we look beyond the standard approaches to energy projects to add features that benefit people and heal the Earth — we call these ‘plus-ones,’" Renner explained. "These can include dual-use solar and agricultural projects, known as agrivoltaics, which can be beneficial to farms and can incorporate regenerative agriculture to restore soil and habitats. Beyond clean-energy projects, we also offer support with climate change mitigation and adaptation planning, site remediation, biodiversity support, natural regeneration techniques for clean air, carbon sequestration, and habitat restoration. We seek to maximize the community and environmental benefits of each project.”

Through its energy sovereignty-centered mission, Seneca Solar has the potential to share the Seneca Nation’s environmental values and wisdom of the natural world.

“Indigenous cultures around the world value their relationship with the natural world and respect the natural balance that sustains life,” Renner said. “Native communities possess wisdom and expertise but have historically been left out of discussions and efforts to heal the Earth, and they have experienced generations of oppression and loss. Restoring balance requires community with respect, cooperation and peacefulness. “

In its search for equitable climate solutions, Seneca Solar is rectifying historical injustices and freeing Indigenous communities from the yokes of extractive energy development models, positioning native groups across the nation to achieve energy sovereignty and more.

Image courtesy of Alternative Energy Development Group

Frontier Co-op sees little dichotomy between good works and the bottom line. For example, leadership views the cooperative’s Breaking Down Barriers to Employment initiative — launched in 2018 to help formerly incarcerated people find jobs and address other systemic barriers to employment in the community — as primarily a “business-building exercise.”

“Our biggest motivation is, honestly, the needs of the business. Unemployment was extremely low here in Iowa. We’re growing a lot, and we were having trouble finding people who were interested in coming to work in our factory,” Frontier Co-op CEO Tony Bedard told TriplePundit. “I was looking for solutions to our employment needs.”

A producer of sustainably sourced and organic spices, herbs, botanicals and plant-based products, Frontier Co-op was recently featured on the Inc. Best in Business list in the correctional re-entry services category for the Breaking Down Barriers to Employment initiative. 

Through the initiative, the 50,000-member cooperative partners with local organizations to address challenges connected to employment and economic mobility. A key element of the effort is second-chance hiring practices and apprenticeship programs that help people build important skills and work experience to be successful within the co-op, the manufacturing industry and their communities.

“We direct 5 percent of our pretax profits into socially responsible causes," Bedard said. "But those are all driving our business, whether directly in the bottom line because we’re getting really good employees who are doing a great job, or indirectly through marketing campaigns where we’re able to honestly share that our story.”

"Values are something that not only natural food consumers, but today’s consumers in general, and millennials specifically, are looking for in a company, as they look at how this is going to help them live out their own personal missions," he continued. 

An estimated 70 million people in the U.S. have an arrest or conviction record, and more than 600,000 men and women are released from incarceration jail each year, according to a 2021 report from the U.S. Chamber of Commerce.

With labor shortages growing and becoming more acute each year, finding ways to successfully reintegrate formerly incarcerated individuals brings many advantages. First, there are personal benefits to people who can get a fresh start supporting and taking care of themselves and their families. Second, employers benefit by having a talented labor force to tap into to meet their workforce needs. Lastly, society gains when ex-offenders are connected to employment opportunities and their communities in terms of reduced recidivism and development of human capital. 

The Breaking Down Barriers to Employment initiative aims to address systemic barriers hindering employee success and economic mobility by providing support services, including access to subsidized childcare options, transportation, second-chance hiring practices, and apprenticeship and skills training programs with the aim of supporting career success for employees and program participants.

“Business does need to be a force for change, and roughly 1 in 3 Americans are or have been involved with the criminal justice system, so there’s this large population that are being excluded,” Bedard told us. “I mean, all of us sort of hit forks in the road in our life, right? Some of us are fortunate enough to take the better fork, so we’ve got to be open to this. If it wasn’t for programs like Breaking Down Barriers to Employment, I don’t know where the real rehabilitation will come from. People need a chance to right themselves.

As an extension of the initiative, Frontier Co-op recently committed $225,000 over a three-year period to continue its partnership with Willis Dady Homeless Services in Cedar Rapids, Iowa. The partnership aims to expand supportive housing units, employment training, one-on-one case management services, childcare, transportation and more.

“Without partners like Willis Dady, we couldn’t make this happen," Bedard said. "If there’s anything else that comes out of this, it is that if businesses do try this . . . they need to make sure they’re using the support services that are in their communities."

Transportation is just one area where the partnership with Willis Dady has made a significant impact, he said. “People couldn’t get to work, and if you can’t get to work, you can’t hold a job, so we’ve created a van service for all three shifts. The riders pay $5, we pay $5. When gas is is $4 a gallon, you can jump in the van and show up to work.”

Alisia Weaver is one of the Breaking Down Barriers to Employment initiative’s success stories. An operator at Frontier Co-op, Weaver told TriplePundit that if someone can’t make a living for themselves after being released from prison, they may “end up doing whatever is necessary to support” themselves, making it difficult to get their lives on track and heading in the right direction.  

“In prison, they try to prepare you for reentry as much as possible, but the recidivism rate is so high. A big part of that is because you just can’t find a job,” Weaver said. “For any employers or recruiters, I’d just encourage you to take a chance on individuals with any criminal background. You can make a huge difference.” 

Images courtesy of Frontier Co-op

Global gender equality is three centuries away, according to the United Nations, though equity in the workplace could be achieved in half that time. Moving the needle any faster will require major investments in addition to proactive, broad-scope and value-based DEI initiatives. As such, the private sector has the opportunity — and the responsibility — to lead the charge toward a truly equitable future.

The authenticity of an organization’s commitment to diversity, equity and inclusion (DEI) will ultimately show through in a number of metrics — from employee and customer loyalty to diversity among board members and C-suite leaders. But too often, DEI initiatives are relegated to a small corner within an enterprise when what is needed is a broader, more comprehensive approach. Businesses can ensure they are on the right track by making inclusivity and equity a part of the deeper value system. That value system integration can elevate its true importance and bring benefits to the whole enterprise.

TriplePundit sat down with Mastercard’s chief inclusion officer, Randall Tucker, to learn more about how the financial industry can approach DEI on a broader basis and achieve gender equity not just at the office, but in the larger marketplace as well.

TriplePundit: What makes Mastercard’s approach to DEI different from other initiatives? What’s behind its success?

Randall Tucker: It goes back to the Mastercard Way: It's not only what you do, but how you do it. A big part of that is inclusiveness. DEI stems from inclusiveness that is already active within the Mastercard Way, so it hangs on a bigger initiative — or bigger thinking within the organization — which is really powerful for our company. 

It's about having leaders sign up and author the strategy, because it can't be something done in the middle of the organization. At the end of the day, you need the top leaders within the organization to say, ‘This is important: Here are the things we live by, and here are the things we're going to do, so what we're striving for is based on our value system.’ Until that conversation happens, until they sign off on something or get behind something, it's very hard to make any real movement.

3p: How can a business ensure that its work around DEI aligns with its core values? 

Tucker: The only way that those core values actually show up is through proof points. By having representation at certain levels that match up with our census data, for example, we can know we’re being equitable. A DEI Strategy isn’t inclusive unless it focuses on creating an environment where everyone has the opportunity to succeed and their voices are valued. It’s a proof point that our value systems are not just things you see on posters, they can be defined and we can demonstrate what we've done to move the needle.

We’ve also made a commitment to equal pay. It’s important that for every dollar a man makes, a woman makes that same dollar. It’s about making sure people feel valued. People work because they need to support their lives and the lives of their families, so making sure they’re starting off from a place of equal pay is really important. We do external auditing on that — not only on gender, but on communities of color as well. 

And from an HR perspective, it’s important to ensure that women are experiencing the organization in the same way as men or other groups are. We conduct an All Employee Experience Survey annually, which is exactly what the name indicates: it allows us to gauge how our employees are experiencing life at Mastercard. The insights we receive help us understand if all groups are experiencing the organization in the same way. It allows us to use data to inform our action planning to ensure we’re making a positive impact – reinforcing with our employees that we’re listening, learning, and acting based on their direct feedback. 

3p: What about applying DEI beyond recruitment and promotion, such as with customers and the community at large?

Tucker: The efforts we make externally are centered around our commitment to financial inclusion. We've made a big commitment to bring 1 billion people, including 50 million micro businesses and small businesses into the digital economy. We’re also looking to help 25 million women entrepreneurs grow their businesses. It’s not just about individuals, but about developing communities, wealth, and access. That has been hugely important for us to be able to do for everyone, and especially for underrepresented communities, including women.

Further, as we look at developing the prosperity pipeline for women, we have a program called Girls4Tech which is introducing girls to science, technology, engineering and math (STEM) programs, and it is hugely successful. We probably won't see the full benefit for another 10 or 15 years, but you have to plant the seed. That's what Girls4Tech does: It plants the seed and, hopefully, it will germinate and grow and lead to a lot more women in STEM roles. 

3p: A lot of DEI programs miss the mark when it comes to including people with disabilities and neurodiversity. What can you tell us about Mastercard’s neurodiversity hiring pilot?

Tucker: We launched our neurodiversity program back in 2021 with our tech team, starting with a change to how we interviewed people. Not everyone is able to articulate in a way that is typically expected in an interview. We wanted to be able to accommodate them, so we set up alternatives where applicants can show that they can do the work instead.
I think that's innovative for us to say: We want this talent. This talent may not be fitting the box that we use all the time, but we're giving them our real-world test to see if they can do it. And they are exceeding our expectations. 
It’s an ongoing journey for us, we have a lot more to do in this space. The whole point is that there isn't a one-size-fits-all model. We want to be able to customize and meet the need of our employees, our customers, our community partners, and even our shareholders and investors.

3p: Does working from this broader DEI perspective give you a sense of empowerment in your work?

Tucker: Yes, it's almost like each of us within Mastercard has been deputized to be change agents. I've never been in an organization with so many volunteer opportunities or opportunities to do such amazing stuff. It’s really important to our culture and how we operate. And I think it's the secret sauce — our diverse experiences as an employee community make us successful as a company.

This article series is sponsored by Mastercard and produced by the TriplePundit editorial team.

Image courtesy of Mastercard

In many ways, private equity is made to be invested in environmental, social and governance (ESG) initiatives. But it takes thoughtful strategies to ensure those investments generate maximum value for both business and society.

Record levels of cash reserves — including $1.1 trillion in the U.S. and another $6.3 trillion in assets under management — combined with increased investor focus on ESG could make private equity an attractive vehicle for creating real impact.  

Why private equity is well-suited to ESG investment

ESG topics are important to limited partners and their stakeholders, especially those dealing in pension funds and sovereign wealth funds. Ninety-three percent of limited partners said they would walk away from an investment opportunity if it posed an ESG concern, according to a 2022 survey from Bain and the Institutional Limited Partners Association.

Private equity operates with the long term in mind. Whereas executives of publicly-traded companies must manage their businesses to meet quarterly guidance, portfolio companies operate on a longer time horizon due to their average holding period being five to six years. 

Likewise, ESG investment is also a longer-term play. Greenhouse gas emissions reductions could take years to realize, for instance. A focus on creating long-term value for businesses and for society is the key to ESG investing. This is fundamentally different from the quick turnarounds and rapid returns that have characterized decision-making in the past.

Private equity investors, as owners, have the authority to move nimbly on business strategy.  Unlike public investors, who must engage with company management and often rely on shareholder resolutions and proxy voting to change strategies, private equity firms sit on the board and either control or heavily influence operations and strategy. As a result, private equity investors typically have much simpler engagement and faster decision-making.

ESG is increasingly recognized as a value-lever, helping investors command a premium price at exit. Strong ESG management can bolster performance and attract future investors. It can also create higher values for limited partners when they eventually sell their assets. 

Given a hypothetical opportunity to acquire a new business, executives and investment professionals say they would be willing to pay roughly 10 percent more for a company with an overall positive record on ESG issues versus a company with an overall negative record, according to a research from McKinsey.

Private equity firms aren’t compromising financial returns for a societal return

Strong ESG performance, backed up by credible data and communicated well, can help deliver a premium price at exit. Private equity firms should ask the following questions to be sure they aren’t leaving value on the table. 

Have you identified ESG or climate risks that could materialize over your hold period and impact your exit strategy? EQT Group, a Swedish investment firm, turned climate risk into an investment opportunity last year when it acquired two North American subsidiaries of the U.K.-based transportation service providers First Student and First Transit. Increasing energy prices, and potential future regulations associated with the use of traditional fuel sources, are climate risks that could materially impact such transportation businesses. EQT’s investment thesis is centered around electrifying the First Student and First Transit fleets, thus accelerating its transition to renewable fuel sources.

Are there opportunities to shift business models to be more sustainable or solve your customers’ sustainability challenges? A tool manufacturer may shift to a rental model for equipment that is not frequently used, for example. This business model can open up new markets of users for their products, as well as reduce the environmental impact of creating new tools. 

Or a financial services company may build a new product to educate consumers on the benefits of solar installations and then finance the installation.This would drive additional revenue and reduce global emissions.

Do your portfolio companies understand the business value of their ESG efforts? Partners Group, a Swiss private equity firm with $135 billion in assets, worked with a global provider of outsourced pharmaceutical supply chain solutions, PCI Pharma, to reduce waste and energy and improve worker safety. The ESG initiative reduced costs with improved recycling, reduced energy usage, and better worker compensation insurance rates — ultimately improving the bottom line.

Can you leverage efforts across your portfolio companies? L Catterton, a consumer-focused private equity firm managing $33 billion in assets, utilized the scale of its portfolio to develop an emissions offset program for small parcel deliveries whereby FedEx will measure emissions of select deliveries, allowing companies that opt-in to track their emissions and purchase offsets via Bluesource.   

Are there companies in your portfolio that could command an “ESG premium” at exit with appropriate measurement and communication? For example, a chemical manufacturer that provides greener and safer chemicals to various end markets may be able to attract impact investors and command a premium at exit if it’s able to articulate its products’ specific environmental impact compared to the alternatives.

Similarly, a staffing business with a small but growing diverse recruiting offering can demonstrate its social impact and attract strategic buyers who already have diversity commitments.

The bottom line

Focused ESG actions by private equity drive efficiency, profitability and resiliency. Successful firms right-size their ESG actions and combine careful due diligence with strategic initiatives for value creation well before exit in order to drive both business and societal growth. Is your firm leaving value on the table?

Image credit: Nataliya Vaitkevich/Pexels

The Prison Fellowship, a faith-based nonprofit serving U.S. prisoners, former prisoners and their families, launched the first Second Chance Month back in 2017. The monthlong campaign — including rallies, events, petitions and social media engagements — aimed to challenge the stigma of criminal justice involvement and champion second chance hiring, housing and other opportunities. 

Thanks to their advocacy, Second Chance Month is now observed nationally every April, with successive White House proclamations over the past six years. So, what are second chance policies, and why are they necessary? Let's take a closer look and explore how major U.S. businesses are getting involved. 

A crisis of justice and a missed opportunity 

Anywhere from 1.7 million to more than 2 million people sit in U.S. prisons and jails at any given time. America's growing carceral system tears families apart and sends ripple effects across the economy and society, with communities of color being most affected: Though the U.S. population is roughly 13 percent Black and 19 percent Hispanic, Black and Brown people make up about half of those imprisoned. 

After decades of mass incarceration, approximately 1 in 3 U.S. adults now has a criminal record that would appear on a routine background screening. Even after serving their sentences, those with criminal justice histories are often turned away by employers, locked out of housing, and deemed too high-risk for loans and other financial services. In over a dozen U.S. states, they can never vote again. 

Though over 650,000 people come home from prison each year, more than half are unemployed a year later, increasing the likelihood they’ll return. 

Numbers like these are particularly tragic as industries across the U.S. complain of labor shortages and some have reportedly turned to child labor in order to stay staffed. 

Second chance hiring takes hold across corporate America

Second chance hiring can take many forms. For example, an employer may remove the checkbox on job applications that requires a person to disclose their criminal justice history, or stop considering criminal justice involvement as a disqualifying factor in the application process. While these concepts are not new — the "ban the box" campaign to remove the disclosure checkbox from first-round applications first started in the 1990s — they've garnered increasing attention from the U.S. business community over recent years.

The Second Chance Business Coalition, for example, launched last year to empower companies with the tools, relationships, and expertise to advance career and economic opportunities for the more than 70 million Americans with criminal records. Its membership has grown to nearly 50 large U.S. employers, from Gap and Ralph Lauren to Visa, NBCUniversal and Allstate. 

Likewise, the recently formed Workforce and Justice Alliance brings businesses together to remove workforce barriers for justice-impacted individuals across the U.S. Formed by the Responsible Business Initiative for Justice (RBIJ), an international nonprofit that works with companies to champion criminal justice reform, the Alliance also includes leadership from Mod Pizza — an early champion of second chance hiring policies. 

For corporate members like these, second chance hiring just makes sense. Such high levels of caging and incarceration have effectively boxed tens of millions of people out of the labor force — increasing rates of poverty, recidivism and community fragmentation at a time when companies need workers more than they have in decades. 

"Second chance hiring is increasingly seen by employers as a common-sense solution to tackle ongoing labor shortages," Maha Jweied, co-CEO of the RBIJ, told TriplePundit. "We also know that access to good jobs is the most important determinant in whether an individual will reoffend, so by giving deserving individuals second chances, businesses are actively making their communities safer."

Ken Oliver of Checkr, which offers solutions for fairer background checks, agrees. He joined Jweied and Shamia Lodge of CEO Action for Racial Equity at a SOCAP event in October to discuss these issues around second chance hiring and why businesses should get involved. Like Jweied, he sees second chances as a fundamental justice issue as well as an economic one. 

“It’s really important from an equity standpoint to provide each and every person — whether they have a record or not — equal access to the American economy and to the middle-class economy, to help fuel decarceration and stop relying so much on punishment and really investing in people," said Oliver, executive director of the Checkr Foundation, who himself was formerly incarcerated. "We’re asking employers not to lower the bar, but to lower the barriers.”

Broad, bipartisan support for second chances

From a cultural standpoint, defining people by their past mistakes is an inherently un-American concept. Americans love second chances. They'll root for the underdog just for the sake of it and never grow tired of a good David-and-Goliath story. So, it's no surprise that second chance hiring, housing and financial policies have broad support among the U.S. public. 

In a 2021 survey, 76 percent of U.S. workers said they'd feel comfortable working for an employer that hires people with criminal justice histories — and 83 percent would be happy to patronize businesses that leverage second chance hiring. A 2022 survey of small business owners also found broad support for second chances: 84 percent of respondents feel that removing criminal justice histories from applicant screenings will benefit small businesses, and nearly 80 percent agreed these policies will benefit communities. 

“Enacting policies that help us tap into a larger pool of candidates only makes sense,” said John Arensmeyer, founder and CEO of Small Business Majority, which conducted the survey, in a statement. "Smaller firms widely support legislation that improves second chance hiring opportunities for justice-impacted individuals, opening the candidate pool to those eager to contribute to their local economy and community." 

As we move through April, TriplePundit will take a closer look at how businesses big and small are embracing second chance hiring policies, as well as efforts to improve access to housing and financial resources for people with criminal justice histories. Watch this spot for more! 

Image credit: Nathan Dumlao/Unsplash