Jackie Roberts, chief sustainability officer for The Carlyle Group, says environmental, social and governance concepts touch on four key organizational aspects: customer satisfaction, brand equity, operational efficiency and workforce strength, she said.
Roberts helps ensure integration of these concepts across Carlyle’s organization, including within the firm’s portfolio companies, which span the globe.
Sustainability continues to grow in importance because of impacts on the bottom line through measures like energy conservation, but also because of customer expectations, Roberts said.
“If you can go into the workforce and say, ‘our largest customer is asking about sustainability, we can do these projects, they’re going to save us money,’ that’s a strong argument,” Roberts said.
And for a firm like Carlyle, not only customers but limited partners are helping increase focus on ESG. “We see particular LPs out of Europe, California and New York, a third of our LPs are focused on this issue,” Roberts said.
ESG has slowly taken hold in the corporate world over the past decade, and even more recently in private equity.
Some of the biggest firms, like Carlyle, Kohlberg Kravis Roberts and Blackstone Group, direct more resources toward enhancing these concepts. Changes occur at the firm level, but perhaps more important, ESG concepts become part of firms’ investment plans at the portfolio-company level.
As part of this effort, Carlyle publishes an annual Corporate Citizenship report. This year’s report helped outline measures the firm established in this area.
Geography poses a challenge to promoting and integrating ESG, especially for businesses in developing markets, Roberts said. Managers there may be much less experienced with worker benefits that are taken for granted in the developed world, she said.
Carlyle worked with its Yakjin Trading Co portfolio company to expand its sustainability and transparency efforts in 2014 and 2015, the firm’s 2016 Corporate Citizenship report says.
Under Carlyle’s ownership, Yakjin appointed a senior executive to lead its sustainability initiatives; improved oversight of production facilities in Vietnam, Cambodia and Indonesia; and developed new channels for management-labor discussions and new worker benefits in Cambodia, according to Carlyle’s report.
At Yakjin, “there were so many unions, the employees didn’t know what union they were part of,” Roberts said. “We helped fix that by improving communications with workers.”
In some cases in developing countries, “we work on basic things like making sure breakfast is on-site for employees to enhancing long-term job security and making sure people understand the role of unions,” Roberts said.
To ensure investors and customers understand where Carlyle is moving in this area, the firm also has placed more focus on transparency in this year’s report.
Transparency means “being more granular … providing more visibility into what companies are doing on these issues,” Roberts said. “Part of my role is to be the point person LPs can call when they have questions in this area.”
Photo of Jackie Roberts courtesy Carlyle Group