At a moment of unprecedented attention, investment, and opportunity for the emerging field of ESG, leaders are asking: Who is best preparing their organization for the society of the future? Who is innovating today to meet decades-long environmental and social goals? Who is setting standards that catalyze their industry’s change for the better? Who is defining what bold and aspirational work looks like — and how best to advance that work in practice?

Enter NationSwell’s ESG Next, an exemplary group of social impact and sustainability leaders who are shaping business as a force for social and environmental progress, advancing — and even pioneering — the most forward-thinking and effective programs, initiatives, technologies, methodologies, practices, and approaches.

For this installment, Greg Behrman, CEO + Founder of NationSwell, sat down with Pete Stavros, co-head of U.S. Private Equity at KKR , to talk about his journey to the field of ESG, the leaders and books that inspire him, and why the movement for broad worker ownership is good for just about everyone — even if its myriad of implementational challenges can be daunting.

Greg Behrman, CEO + Founder, NationSwell: Tell us about your personal and professional journey.

Peter Stavros, Co-Head of U.S. Private Equity, KKR: My dad operated a road grader for a small construction company in Chicago for about 45 years, and I saw firsthand what it was like to earn an hourly wage. My dad liked his job. If you were to talk with him, he’d never begrudge being a construction worker. But there are two things about it he didn’t like: First, the inability to build wealth on an hourly wage of 15 bucks an hour; and second, the lack of alignment of incentives. 

There were so many moments in my childhood that really centered on the hourly wage and the lack of incentive alignment, like a big fight my dad’s union had with the company over whether workers would get paid for the drive to and from the job site, whether they get paid for the lunch hour. And my dad would say, “Isn’t this crazy? It’s not about how much we get done, or the quality of what we do. It’s all about the hours.”

My dad always really dreamt of profit sharing, or worker ownership, or some way for his union to be aligned with the company. Neither of my folks went to college, so I didn’t have much of an embedded career path. I happened to find myself at an investment bank right after I graduated, and then I got recruited away to be an investor. The first thing they had me work on was an Employee Stock Ownership Plan (ESOP), a fascinating experiment from 1974 wherein Congress tried to provide tax incentives for broad worker ownership. 

It was almost like the universe was saying, “You should learn about employee ownership.” And so when I went to business school, every spare chance I worked ownership into the curriculum that I was studying.

Behrman, NationSwell: Can you tell us about Ownership Works, the nonprofit you founded?

Stavros, KKR: Ownership Works is a nonprofit organization that partners with companies and investors to provide all employees with the opportunity to build wealth at work. If worker ownership is done well, it’s good for all stakeholders. We’ve seen broad-based employee ownership create meaningful wealth-building opportunities for employees, uplift families, reinvigorate corporate cultures, and improve business performance. 

From everything I’ve seen in all the work I’ve done on this — and I’ve been working on this since I was in business school — if it’s done well, it’s good for all stakeholders. Now the challenge is that it’s hard to do: it takes a ton of time and effort. That’s really a lot of what Ownership Works is trying to unravel: How can we help companies do this more efficiently and more effectively?

So, to start, let’s say your goal is to extend ownership to Ingersoll Rand’s 16,000 workers in 80 countries — how do you actually do that? How do you administer a huge plan like that mechanically, structurally, and from a tax regulatory compliance legal perspective? And then, importantly, how do you get people to understand and value it across all these different jurisdictions, facilities, languages, time zones — and then how do you use it to build culture? 

You have to start from a place where you acknowledge that there’s low trust. Look at the data: 70% of Americans don’t like their jobs. 15% to 20%, depending on the company, actually hate their jobs. They’re literally throwing wrenches in the machines trying to hurt their employer. And then you look at the Treasury Department saying two-thirds of Americans are not financially competent. So this isn’t just a lower income person’s problem, it’s an epidemic in the country.

As we grapple with these challenges, we’re also trying to do enough storytelling that we build a broader movement around this to build trust and buy-in. Now that Ingersoll Rand’s 16,000 workers across 80 countries have all become owners, the hourly workers have earned well over a half a billion of wealth for themselves. This took nine and a half years, but the quit rate went from over 20% per year to about two and a half percent — so we went from one in five walking out the door to one in 50. And the engagement scores went from the 19th percentile to the 91st. 

When you see something like that, you have to ask yourself, “Who could that not be good for?” Workers aren’t quitting because they’re happier. Companies have a more stable workforce. The company doesn’t have to hire 3,000 new people every year, which means less recruiting costs, less training costs, and smaller losses in productivity and knowledge since every year, the thousands of people who would be walking out of the door are staying put.

From an investor perspective, that was one of the better deals we’ve done — it was a multi, multi-billion dollar gain for our investors. It’s been great in the public markets. The stock at one point had tripled, and it’s still more than doubled despite a bad market. 

We’ve been working on Ownership Works internally for about 12 years. We’re currently working with over 60 partners to expand shared ownership, including banks like Goldman Sachs, Morgan Stanley; investors like KKR, TPG, Warburg Pincus and Leonard Green; labor leaders like Wilma Liebman, President Obama’s head of the National Labor Relations Board; nonprofit leaders like Ford Foundation and Rockefeller Foundation; and some of the biggest pension funds in the country.

By the end of Q1 2023, I imagine we’ll have close to 100 organizations around the table trying to make a real step forward in how ownership and upside is shared and how that’s used to build stronger cultures. 

My estimate is the top 20 private equity firms, if they were all to do this, you’d be talking about 5 million people impacted. The potential for scale impact is massive. 

Behrman, NationSwell: How would you define this present moment in ESG? Where do we find ourselves, and where is the field going?

Stavros, KKR: It’s become politicized, and I’m concerned. But I try to approach some of the factors that I’m most passionate about as good business. If you take employee ownership, it’s hard to make an argument against it. It’s good for workers, good for corporate cultures, good for communities, and good for investors. But I think if you come at some of it from my perspective, where I frame it as good business, then it would be a shame if people aren’t also looking at this as a risk mitigation tool, a culture enhancer.

Behrman, NationSwell: Who are some leaders in the space whose work inspires you?

Stavros, KKR: I would mention Vicente Reynal at Ingersoll Rand, Kathy Bolhous of Charter Next Generation, Dave Bangert at C.H.I. Overhead Doors, and Bert Bean at Insight Global.

Behrman, NationSwell: Can you tell us about some books that have informed your approach to leadership?

Stavros, KKR: The End of Loyalty” by Rick Wartzman is a great book, and it basically chronicles what happened in the labor market: how we went from where we were 50 years ago — when workers had a defined benefit pension, gold-plated healthcare, and a myriad of worker benefits that basically amounted to lifetime employment — to where workers are now, where they’re on their own for retirement, health care, and job security. 

Alongside the Wartzman book, I’d also raise up “The Great Risk Shift” by Jacob S. Hacker, and “The Fissured Workplace” by David Weil as great, related books on what’s happened to the economy that’s made it so hard on working class folks.


To learn more about how our ESG Next honorees are shaping business as a force for social and environmental good, visit the series hub. KKR is a NationSwell Institutional Member. To learn more about membership in NationSwell’s community of leading social impact and sustainability practitioners, visit our site.