Topic: Philanthropy and capital

ESG Next: An Interview With Liberty Mutual’s Melissa MacDonnell

Posted on by Greg Behrman

At a moment of unprecedented attention, investment, and opportunity for the emerging field of Environmental, Social, and Governance (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 look like — and how best to advance that work in practice?

Enter NationSwell’s ESG Next, an exemplary group of investors, executives, authors, philanthropists, social sector leaders, academics, and field builders who are helping to shape 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, NationSwell interviewed Melissa MacDonnell, President, Liberty Mutual Foundation and Vice President, Community Investments, Liberty Mutual Insurance, about what this moment in corporate philanthropy means for practitioners, the power of a collaborative framework for funding, and how employee volunteerism programs can better center inclusion.

Greg Behrman, CEO + Founder, NationSwell: Tell us how your professional and personal journey led to this work.

Melissa MacDonnell, Liberty Mutual:  My mom worked as a social worker in Newark, NJ and instilled a strong sense of service in my nine siblings and me.  When I was in high school, she would take me every week to volunteer with adults with disabilities.  I helped them with daily tasks like making the bed, going to the local store, completing household activities, and more. Because of my mom, service became a part of my DNA, a lens through which I would see the world. 

One of the memories that will always stay with me was of one man with whom I worked. He was misdiagnosed as a child as having developmental disabilities; when in fact, he was deaf. Therefore, he spent his entire life in an institution. It was striking to know that the inability to understand his struggle resulted in a life of institutionalization. I built a strong bond with him and spent time teaching myself sign language. I wanted him to know I saw him. 

Later, I became a volunteer GED teacher and taught young people who were forced to grow up way too soon, forced to leave school to make money for their families, forced to deal with the urgency of needs today rather than building for their futures. 

I also had the chance to become a big sister; twenty-four years later, we are still sisters. Becoming a big sister for a girl living in a group home showed me how many people are struggling on their own, without the basic supports so many of us take for granted.

Behrman, NationSwell: How do you define this moment in corporate philanthropy?

MacDonnell, Liberty Mutual: It’s such an exciting moment for corporate philanthropy. When I started nearly 25 years ago, philanthropy was more of an offshoot. The company was always deeply committed to the community, but there was a desire to keep the philanthropy separate.  That desire came from a really good place; however, it left some of our potential for impact off the table.

Today, we are an integral part of Liberty Mutual — we’re central to the purpose of the company. There’s a recognition that our engagement in the community is collectively owned through our foundation and through each of our 50,000 employees who want an opportunity to give, serve, and volunteer. And with the proper construct, we have the chance to empower and engage all of Liberty to bring our expertise, our skills, our passion, and our resources to bear for our communities.

I think we’re just all collectively inspired by the opportunity to invest the strength of Liberty Mutual as a force for social good.

Behrman, NationSwell: What are some unique programs or initiatives you’re leading that other leaders may benefit from knowing?

MacDonnell, Liberty Mutual: Our work in youth homelessness is a great example of a programmatic body of work that we’re proud of. 

In youth homelessness, we found an issue that was not getting visibility or support, where there was a real and demonstrable need. We heard from our education partners that young people were showing up to school with backpacks stuffed with everything they owned. And we heard from adult shelters that they had to turn away more and more young people every day. 

The more we pulled the thread, the more we recognized that youth and young adult homelessness was something that really needed attention. So, we started to invest and joined a collaborative that included city and state officials, nonprofit leaders, Liberty Mutual, as the corporate leader, and, most importantly, young people with lived experience. Together, we helped the City of Boston successfully apply for $4.7 million in federal funding, which was critical for creating 157 housing opportunities for youth and young adults experiencing homelessness. Since 2018, Liberty Mutual has committed $24 million towards the issue, largely in Boston.

As a result of these collective efforts, the number of young people experiencing homelessness in Boston has dropped 44%. This collaborative approach is the reason this effort has been so successful — because it included so many voices and so many experts—particularly young people with lived experience.

Internally, another example that comes to mind is our Liberty Torchbearers program, where we provide employees the opportunity to serve annually in the community during work hours, volunteer on their own time to earn nonprofit mini-grants, and give to nonprofits that mean something to them, while earning a 100% company match with no upper limit. 

What differentiates Torchbearers is that even as we use it to drive organizational cohesion around giving back, we center it on individuality and inclusivity at its core. We’re all different, and we’re all in different seasons of our lives; we all give, volunteer, and serve differently from one another. If you’re a working parent and your way of giving back is volunteering your time during the workday, you can be a Torchbearer; if you’re at a different stage in your career and don’t have as much time to volunteer, but do have the resources to donate, you can be a Torchbearer. Or if you’re a manager and you really want to infuse service in some sort of team building, you and your team can engage in a community project together as Torchbearers. 

Having a framework that is inclusive and respectful of the different places and stages of people’s lives makes Torchbearers such a positive and impactful program.

One last initiative comes to mind: We’ve pulled together a cross-functional team within the company to explore how we can bring to bear the unique strengths of Liberty Mutual on behalf of our neighbors most disproportionately impacted by climate change.  So we’ve been inventorying our expertise on the corporate side and listening and learning from our community leaders so we can accelerate, enhance, and advance climate resiliency first in Boston and then beyond.

Our hope is that this work will tap into the best of who we are, and what we do. We have expertise, we have technologies we’re constantly creating for our customers, and there’s so much that can be transferred into our community.

Behrman, NationSwell: To which leadership practices do you most attribute your effectiveness?

MacDonnell, Liberty Mutual: I live with a very deep sense of urgency on behalf of our neighbors. I feel strongly about the needs in our community, and I feel deeply about the people whose voices aren’t always heard. I also believe in the goodness of my colleagues. Together, we can meet this sense of urgency and do everything we can to advance social good. 

Behrman, NationSwell: Who are the peers that you admire and what are some resources – a book, podcast, article, etc. – that inspire  you?

MacDonnell, Liberty Mutual: I admire Jill Shah, the president of the Shah Family Foundation, and Ross Wilson, their executive director. I love the work they do. Not only are they generous givers, but they add tremendous value to community discussions and to the field of philanthropy.

A company I admire is UPS. I love how they’ve used their “superpowers” especially their expertise with distribution in times of crisis: the way that they responded to COVID, getting different services out to people as well as their activation during natural disasters. They’re there, they jump on it, and they do what they do so well in their business. 

In literature, there’s a book by Phil Buchanan called Giving Done Right. I really appreciate his point of view, and his warnings about the power dynamics of philanthropy. George Serafeim’s Purpose and Profit is also a terrific work I strongly recommend. It’s such an interesting book jam-packed with real-life cases. I have also learned a lot by Bill Gates’ How to Avoid a Climate Disaster.  In fact, I’m reading it for a second time right now!

To learn more about how our ESG Next honorees are shaping business as a force for social and environmental good, visit the series hub.

ESG Next: An Interview With Tiger Global’s Ali Hartman

Posted on by Greg Behrman

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 look like — and how best to advance that work in practice?

Enter NationSwell’s ESG Next, an exemplary group of investors, executives, authors, philanthropists, social sector leaders, academics, and field builders who are helping to shape 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, NationSwell interviewed Ali Hartman, Head of Responsible Investment at Tiger Global, about the power of building unlikely bridges, the importance of the “G” in ESG, and the opportunity for clarity and leadership in responsible investment — especially amid the current backlash. 

Greg Behrman, CEO + Founder, NationSwell: How did your personal and professional journey to the field of ESG begin?

Ali Hartman, Head of Responsible Investment, Tiger Global: My journey to this field began long before anyone was using the acronym ESG. In many ways, it began before I even knew my ABCs. You see, I grew up in a social justice activist household, where both of my parents risked their safety and comfort in pursuit of nuclear disarmament. They were civil disruptors in the Plowshares movement and were arrested and imprisoned multiple times for their activism. So I spent my childhood in soup kitchens and at meeting houses, in courtrooms and on protest lines. With that reality came a sense of responsibility to serve the greater good and an obligation to speak truth to power. Changemaking was — and is — a part of my DNA. Literally, my mom was in prison while pregnant with me. 

As a teenager and young adult, I pursued internships and jobs in the public sector and with activist organizations. These were known entities to me based on my upbringing and places I understood that I could make an impact. It was in graduate school, when I took a class called Business Ethics, that I was first exposed to the power of the private sector. 

About a month into the class, a light bulb went off for me. I realized that companies had so much capital, flexibility, access, and influence. I realized that if I wanted to have an impact that could be sustained and scaled, I had to understand how this part of the equation worked. 

Since that class, my career has spanned roles in corporate sustainability, ESG strategy, and responsible investment across big business, private equity, and, most recently, venture capital. These jobs connect money and meaning and prove that public interest and private resources can have a greater impact when they’re working together. 

Behrman, NationSwell: How do you make sense of this moment in ESG?

Hartman, Tiger Global: I’ve been doing this work for about 15 years and have seen real evolution in this space. There’s been tremendous momentum and meaningful scale during a relatively short period of time. But with that growth, we’re also seeing some confusion and chaos. We need to get clear and be intentional when it comes to defining and pursuing ESG management. 

I’m an ESG purist. What I mean by that is when I talk about ESG integration, I’m referring to the measurement and management of material environmental, social, and governance factors in the operations of a business. 

Importantly, what I’m not talking about is impact investing, philanthropy, CEO activism, or corporate values. These are each, of course, critically important. But they’re just not part of ESG strategy. For me, ESG management is about viability, not morality. 

That’s not to say what is good for the sustainability of a company isn’t good for people or the planet — it usually is. When companies are measuring and managing their inputs (including natural resources and human resources) more intentionally, strategically, and efficiently, everyone wins. From where I sit, thoughtful, strategic ESG management has become the baseline of doing business in a world that is more complex and constrained than it has ever been. There’s so much opportunity to build better businesses that are ready to manage the volatility that is here and is only going to grow with time. 

Behrman, NationSwell: Tell us about the work you and your team are leading at Tiger Global, and why it’s noteworthy or potentially even showing early signs of advancing the field.

Hartman, Tiger Global: We are still in the early innings of our work at Tiger. We have a lot more to understand when it comes to purpose building responsible investment into our asset classes and investment strategies. That said, I’m proud of the progress we’ve been making and am excited about what’s to come for us — and hopefully for the venture industry more broadly. 

In the last year and a half, we’ve established a strong foundation for what will be an evolving responsible investment strategy. Our work to date includes firm-level policies, new ESG-related diligence practices, and a suite of monitoring tools to better understand our portfolio companies and fund-level trends. 

We still have a lot to learn about how to best integrate this work into a scaled venture model — one where companies are earlier in their maturity and limited in their resources, and where investors are often passive and minority shareholders. This is a totally different proposition than the work I did in private equity. 

Nonetheless, while the challenges are real, so are the opportunities. I believe that supporting companies early in their evolution and embedding efficiency and ethics into operations from the start can have a profound impact for companies’ growth and for the world in which they operate. 

Something else I am excited about is the chance to advance this work across the venture industry. While some impact-oriented firms or emerging managers have already started to integrate responsible investment strategies into their work, there is a massive opportunity to engage the larger, more traditional firms. Without a doubt, there is both value and necessity in us working collaboratively across the industry. 

As an example, we recently signed on as a founding member of the Venture Climate Alliance alongside more than 20 of our VC peers. Over the last few years, Tiger Global has been taking steps to measure and manage our firm-level footprint, achieving net-zero status as of 2021. As we look ahead, we are excited by the challenge of building tools and resources, setting expectations, and sharing opportunity with our portfolio companies with the goal of helping them better manage the risks and opportunities posed by climate constraints. We’re also excited to help advance the net-zero conversation across the industry.

Behrman, NationSwell: What is something that you’re spending time thinking about when it comes to ESG? 

Hartman, Tiger Global: When it comes to venture, I increasingly think that there’s an opportunity to reprioritize the acronym to be GES, instead of ESG. Putting governance last in the acronym can put it last on people’s minds. While, historically, some may have seen governance as a check-the-box part of this work, it is foundational. I think governance can and should go far beyond anti-bribery or anti-corruption. 

Governance is management and management is talent. And talent is prioritized and prized by the venture capital industry. I think that if we can modernize governance and give the “G” more attention and recognition, we’ll see better outcomes in all dimensions, including companies’ abilities to engage on environmental and social issues, weather volatility, and outperform over time.

Behrman, NationSwell: Who are some peer leaders who inspire you?

Hartman, Tiger Global: I’m inspired every day by folks across the changemaking continuum. Truly. When people say they are depressed about the state of the world, I tell them they should meet some of the people I get to meet. I’ve been having some really exciting conversations with Lyel Resner, co-lead of the Startups & Society Initiative. I think his experience as a tech entrepreneur brings important perspective to the table and I have loved talking to him about the interplay between responsible investment and responsible innovation. 

Shu Dar Yao at Lucid Capitalism also comes to mind. She is a force, highly creative, and has her finger on the pulse of what’s possible for the industry. We had such a great conversation when we were together recently at the Women’s Venture Capital Summit. 

I would be remiss to not mention the inimitable Cheryl Dorsey, CEO of Echoing Green. Cheryl has been many things to me over my years of knowing her — a co-conspirator, super connector, visionary leader, and dear friend. Her work and wisdom have never been more important to the urgent problems we’re collectively facing. I would put Cheryl and the amazing EG fellows in charge of everything if I had a magic wand!

Behrman, NationSwell: What are you reading, watching, or listening to right now that is inspiring your leadership?

Hartman, Tiger Global: A piece of writing that I often find myself returning to and sharing with colleagues in similar spaces is “At the Edge of the Inside” a consideration of the works of theologian Richard Rohr. It emphasizes the importance of effecting change within an organization or system. If you’re on the outside of a system, you can’t fully understand or appreciate it. Conversely, if you’re too close to the center, you may not be able to see its shortcomings. 

That really resonates with me. During the first decade of my career, I often felt out of place. Traditional business people sometimes considered me too alternative, while the activist or nonprofit community sometimes viewed me as disingenuous. Rohr’s piece helped me understand the importance of navigating those edges and building bridges. I highly recommend it to those working within conventional systems but pursuing unconventional goals. 

On a lighter note, it’s essential to find joy, rest, and respite in our busy lives, which I often find when listening — and laughing — to the podcast SmartLess, hosted by Will Arnett, Sean Hayes, and Jason Bateman. It offers a delightful blend of entertainment and relaxation, reminding us to make time for lighthearted fun.

On a related note, I highly recommend the newsletter What Could Go Right, which offers a refreshing perspective amid today’s often negative news cycles. It’s easy to feel anxious or overwhelmed by the state of the world, but it’s essential to recognize the progress we’ve made and the potential for positive change. To address challenges as great as the climate crisis, we can’t rely solely on fear, scarcity, or reactive responses. We have to inspire and excite people by showing them what’s possible and giving them hope. 

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

Seven critical design choices for corporate impact investors

Seven critical design choices for corporate impact investors

EXECUTIVE BRIEFING
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As the global impact investing market surpasses $1 trillion USD, a small yet growing number of companies are adopting the strategy.

Corporate impact investors are motivated by the limitations of traditional philanthropy to fundamentally alter the structural disadvantages of capital markets, the desire to diversify their social impact strategies, the proven possibility of competitive financial returns, and intensifying pressure on the private sector to help finance the UN Sustainable Development Goals (SDGs).

Regardless of their motivation, what these enterprising companies are discovering is a world of opportunity and constraint, one that requires intentionality and conviction when designing an impact investing approach that best serves the organization and its goals.

To support the aspirations of would-be and nascent corporate impact investors, NationSwell went behind the curtain with four successful and well-established leaders in the space. We dug deep into their investment philosophies, models, and mechanics with the intent to pinpoint the most fundamental design choices that determine a program’s shape and direction.

This report summarizes our learnings from these four investors, organized around a short but load-bearing list of questions that any new corporate impact investor will need to resolve with clarity. Each question is followed by further explanation of its significance, illustrations of how the four model organizations answered it for their own purposes, and additional guidance from NationSwell on how to approach the choices at hand.

The seven fundamental design choices:

  • What is your impact investment thesis and how does it align with company priorities?
  • Where do your investments originate within the enterprise?
  • Are you investing directly in companies or indirectly through funds and intermediaries?
  • How are you reaching beyond traditional networks to source investment leads?
  • Who should be at the table when making investment decisions in order to optimize for efficacy and efficiency?
  • What will be your level of involvement with investments after cutting a check?
  • How will you measure and report the impact made through your investments?
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Philanthropy

Commercial products deployed for social good

Commercial products deployed for social good

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This Curated Collection explores a range of ways that companies are creating or repurposing products in service to their social impact strategies. It includes a non-exhaustive selection of representative and innovative examples of impact-oriented products, organized in categories based on how they are used.

The collection includes the following categories: 

  • Products used for fundraising 
  • Product grant programs 
  • Sustainable product; 
  • Special initiative products
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ESG Next: An Interview With Microsoft’s Kate Behncken

Posted on by Greg Behrman

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 look like — and how best to advance that work in practice?

Enter NationSwell’s ESG Next, an exemplary group of investors, executives, authors, philanthropists, social sector leaders, academics, and field builders who are helping to shape 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, NationSwell interviewed Kate Behncken, Corporate Vice President of Microsoft Philanthropies, about the importance of tying together purpose and profit, the power of capacity-building leadership, and this moment of tremendous opportunity for social impact and sustainability leaders.

Greg Behrman, NationSwell CEO + Founder: Tell us about how your personal and professional journey led you to ESG work.

Kate Behncken, Microsoft Philanthropies Corporate Vice President: While I was a lawyer for many years working in Australia and Europe, I was presented with the opportunity to come on board as Chief of Staff for Brad Smith, Microsoft President, Vice Chairman, and General Counsel. That post gave me an opportunity to be exposed to the broader work of the company, and it was in that role that I learned about all of Microsoft’s social impact work. 

I had the opportunity to work on a number of initiatives like Kids in Need of Defense, and I think that exposure is what really lit the fire for me to get passionate about the work we were leading, the opportunity to make a difference, and most importantly, about the responsibility the private sector has to all communities.

Behrman, NationSwell: How do you think about what defines this moment in ESG?

Behncken, Microsoft: As a tech company, we see the tremendous opportunity that technology brings — the huge benefits and great potential for technology to address some of society’s biggest challenges — but we also see the pace of change, the rapid transformation that was only accelerated in the Covid era, and how this pace raises new challenges and also intensifies existing inequities in our communities.

Because of that, at this moment, there’s greater expectation on private sector leaders from everybody — employees, stakeholders, and ourselves. I would say from what I’ve seen at Microsoft, the level of energy across the company for the work we do is at an all-time high. That’s a fantastic opportunity for someone like me in my role, so the question is, how do you tap into it in the best possible way?

We view our goals through four key lenses: supporting economic growth, sustainability, trust and protecting fundamental rights, but ESG is also so broad. I think a lot of us are thinking about what this framework means, and what it’s going to do. There’s going to be more that companies will have to report on in more ways; and there are going to be more things that we want to continue to report on.

Behrman, NationSwell: What is it about your approach to ESG, social impact, and sustainability work that yields the most success?

Behncken, Microsoft: In the private sector, there’s been a historical sense that profit happens at the core of an organization, but the purpose-driven functions take place in this small department that’s separate from it. But I don’t think that’s the case. The more that companies can bring together profit and purpose, the more they’re going to be successful.  

That’s certainly not the case at Microsoft. From a people perspective, we have a multidisciplinary team thinking about how we bring together our purpose and our profit. That’s no easy task. To do that, you really need a diverse skill set. We have people from so many different backgrounds, and as with any team, that diversity makes you stronger, and makes the work better.  

One of the really unique things about Microsoft Philanthropies is a group called Tech for Social Impact, where we focus on how we help nonprofits get access to affordable technology to be able to leverage that tech to grow, scale, and reach more of the beneficiaries that they’re trying to reach. But it’s not just the affordable technology we provide — it’s often that we’re working really closely with them to help them drive their own digital transformation. We’re meeting them where they are. Some nonprofits have great mastery of their technology tools, others not as much. So we, and our partners, listen to the organizations’ specific needs, that’s what makes our model so different from a one-size-fits-all approach to helping nonprofits.

In this arrangement, we reinvest incremental profits generated from the TSI model into philanthropy, into innovation for the nonprofit sector, and into a wide range of social good initiatives. That gives us a tremendous opportunity to do more; the better TSI does, the more that we can reinvest back into the sector.

A lot of people originally thought that a non-profit sales channel in philanthropies is oil and water; they thought, “How can that possibly work?” Well, I see it work. And it’s fantastic. Last year alone, we provided $3.2 billion in donated and discounted technology – up 29% from the previous year – to 302,000 nonprofits that deliver critical services to over 1.2 billion people around the world. Over the next five years, we will double the number of nonprofits we reach with technology discounts and grants to help amplify their impact.

We’re also focused heavily on multi-sector partnerships, like our partnership with U.S. Vice President Kamala Harris’s office to deepen investments in local economies in Central America, bolstering quality of life, increasing access to work, and helping to stem the tide of migration to the United States. For this initiative, the partners worked together to map out the different “swim lanes,” and then we each focused on the one where we could have the most unique impact. 

We lead the swim lane around digital inclusion: Microsoft is focused on expanding Broadband internet access to 3 million Central American  people and providing access to digital skills learning paths to upskill workers and make them more competitive in the job market. We’re training over 100,000 Central American workers in the next three years, helping them to learn the soft, technical, and digital skills that will enable them to gain access to  higher-paying local jobs.

The partners were very thoughtful, not only about which of us could lean in to each of the swim lanes, but about how each lane supported all the others,  and then how all involved collaborated more closely with government. I think it’s a model that we might start seeing in other countries around the world. You can learn more about our work, and the other partners involved on the White House website.

Behrman, NationSwell To which of your leadership practices or approaches do you attribute your success leading the sustainability function of an organization like Microsoft?

Behncken, Microsoft: One of my core beliefs about being a leader is that leadership is about building capacity and not dependency. Of course, I’m very focused on making sure Microsoft Philanthropies is a great place to work, but I’m also really invested in how we’re helping to grow people’s careers in the space. 

I’m also a firm believer in the power of partnerships. We partner a lot with governments around the world. It’s the only way to really achieve scale with some of the work we do, like our global initiative to upskill workers in an effort to support local economies and talent pipelines around the world.

Lastly, I am a firm believer in focus, and I steer my team towards only being at the tables where we can add really unique value. If you do less, you’ll drive greater impact. That’s a journey we’re all still on.

Behrman, NationSwell: Who are some leaders in this space whose leadership inspires your own?

Behncken, Microsoft: I’m inspired by Wendy Young of Kids in Need of Defense, a great organization working to help unaccompanied minors migrating to the US. Wendy is an amazingly generous leader, and Microsoft has worked closely with KIND over many years. I’ve had the opportunity to see how she thinks about addressing systemic issues, and she’s just very on top of it. An absolutely wonderful person.

My team and I look at the work that Shamina Singh is leading at Mastercard, not just on inclusive growth but also more broadly across the whole organization, thinking about how they bring together their purpose and their profit. (Editor’s Note: Shamina Singh is a future ESG Next honoree, and will be profiled in this series at a later date.)

Behrman, NationSwell: What are some resources you recommend that have helped to fuel your leadership, professionally and personally?

Behncken, Microsoft: Caste, an exploration of how America has been — and still is — shaped by a not-so-hidden caste system, is essential reading. The author, Isabel Wilkerson, links our social system to India’s and Nazi Germany’s, and her analysis has shaped my view of the world today.

Brad Smith, who’s the president of Microsoft, recently wrote a book called Tools and Weapons, and also recently released a podcast where he speaks to leaders in business and government to look at the world’s most critical challenges, the intersection of technology and society, rural broadband, and digital inclusion. I think they’re both essential.

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

ESG Next: An Interview With Bain Capital’s Tricia Winton

Posted on by Greg Behrman

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 look like — and how best to advance that work in practice?

Enter NationSwell’s ESG Next, an exemplary group of investors, executives, authors, philanthropists, social sector leaders, academics, and field builders who are helping to shape 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, NationSwell interviewed Tricia Winton, Partner and Global Head of ESG at Bain Capital, about why she thinks ESG isn’t going away anytime soon, the power of a private partnership model in advancing ESG work, and the importance of focusing on the upside while you navigate the risks and pitfalls.

Greg Behrman, Founder + CEO, NationSwell: Was there a defining experience or moment that drew you to this field?

Tricia Winton, Partner and Global Head of ESG, Bain Capital: It wasn’t just one moment. I’ve had the opportunity to be surrounded by leaders in our field and a firm like Bain Capital that believed that thriving businesses across a number of dimensions including governance, sustainability, organizational performance and culture generate higher returns as well as positive societal and environmental outcomes. I’m proud to say that Bain Capital has held this belief since its inception and before the term ESG came to fruition.  

I joined Bain Capital in the midst of the pandemic and saw firsthand the power of an organization that is sincere and engages and collaborates with a wide range of important stakeholders. I also saw our ambition to lead in this space. The goal was not to make flashy proclamations, but to drive genuine impact. You can feel that in the culture and in the work, which is very different from what I’ve seen anywhere else.

Behrman, NationSwell: What do you make of this moment in ESG? Where are we in its evolution, and how do you assess this moment?

Winton, Bain Capital: I have a long-term perspective on the evolution of the space, and I think broader socio-economic factors have only heightened the awareness of what’s expected of companies and individuals in facing some of society’s largest problems. The reality is we’re going to need more collective effort, not less.

Here’s the good news: We’re seeing progress every day. We’re seeing more and more employees who want to work at firms and companies that think long-term and holistically about their impact.  We know employees want it and we know investors want it. Ultimately, it’s a focus that is going to reward our industry and the broader business community. 

The more I see this progress, the more my conviction grows around the importance of this work. Of course, we need to address the risks our companies are facing — but it’s equally important to concertedly lean into the upside of ESG work and the lasting, positive impact that businesses can deliver. We can and must do so much more.

Behrman, NationSwell: Can you share how you and your team at Bain Capital approach ESG work in ways that are unique or exemplary?

Winton, Bain Capital:  Our full team really wanted to develop an ESG approach that has our fingerprint on it — distinctive, generative and ultimately our own. 

We’ve had four decades built on a consulting business transformation model that’s really unique in this space — and that really gives us a head start on producing authentic, exemplary work. Our goal is to invest and grow great companies, but also to do that in the right way with a very high integrity, respect for people and enthusiasm to create these businesses that thrive. Because of our consulting roots, we have the desire to work through tough problems. We’re trying to apply that same rigor and intensity to our ESG efforts, endeavoring to build out what we think is a distinctive approach to where our culture is in alignment with our values. 

That manifests throughout the five core ESG commitments we established, where we believe we can have meaningful, measurable impact over the long-term. It also manifests in the practical application of those commitments in our investments and portfolio companies, through examples like building our ESG leadership team with leaders from across our business units, organizing global teams to spot ESG trends and share learnings, and focusing on building good governance in our investments and portfolio companies because we believe that good governance is the umbrella through which ESG efforts get the right traction. We have an intentional approach there with a consistent set of practices that centers around ensuring that we are thinking about ESG outcomes with the same intensity that we have every other part of our investment thesis. 

Other examples include the convening of portfolio company leaders like our Chief Human Resources and Talent Officer monthly forums and annual summit to advance our approaches to human capital management.  In these forums, leaders review the latest strategies and tools to enhance diversity, equity and inclusion and share approaches to boost employee engagement and organizational health.

Finally, we prioritize broader stakeholder engagement with thought partners like NationSwell, Focusing Capital on Long Term (FCLT Global), Business for Social Responsibility and the Sustainable Markets Initiative to advance our sustainable investment practices, and Management Leaders for Tomorrow and the Directors Academy to really expand the pipeline of diverse talent coming to our firm and to our portfolio companies.

Those are the kinds of things we’re building out across our businesses. Soup to nuts, we think this is distinctive and differentiating.

Behrman, NationSwell: What are some key opportunities you see for Bain Capital? 

Winton, Bain Capital:  There’s so much that’s been said about how we need alignment, uniform actions, and clarity as an industry. All of that would be great. But for us, here and now, we’re really focused on how we can measure and drive year-on-year improvements. We continue to build out our measurement and reporting capabilities, centering the tangible outputs that help drive our progress. And when you hear people talk about the confusion and the challenges around data measurement, the momentum of what’s possible and those tangible outcomes get lost from the discussion.

We believe that a focus on tangible outcomes helps us act on priority topics, such as our efforts to reduce our environmental footprint and engage our portfolio companies to reduce carbon. We leverage our deeply collaborative approach, and support from expert advisors to ensure decarbonization efforts are practical and relevant for our companies.  

Behrman, NationSwell: To which of your leadership practices do you attribute your success?

Winton, Bain Capital: I embrace a deeply collaborative process and I’m fortunate that our firm and our ESG team really pride itself on that.  We work to understand different points of view. We believe firmly that more perspectives on a problem will yield a better outcome. I think we are trying to be bold and we have an ambitious vision, but we have this highly collaborative approach that I feel will help us build more effective programs and drive impact over time.

Behrman, NationSwell: Who are the leaders that inspire you in personal and professional ways?

Winton, Bain Capital:  I think one of the most inspiring people to me is Paul Farmer. I had the opportunity to meet Paul on many occasions and learn more about his fundamental belief about global health equity and how important it is to advocate for human health and justice globally. With his passing, the world really lost an incredible visionary.Bryan Stevenson’s work on racial justice in America has been a constant source of inspiration for me, and he is an incredible example of how you build lasting partnerships.

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

ESG Next: An Interview with Wells Fargo’s Jenny Flores

Posted on by Greg Behrman

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 look like — and how best to advance that work in practice?

Enter NationSwell’s ESG Next, an exemplary group of investors, executives, authors, philanthropists, social sector leaders, academics, and field builders who are helping to shape 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, NationSwell interviewed Jenny Flores, Head of Small Business Growth Philanthropy at Wells Fargo, about how her experience as an immigrant in America informed her journey to human-centered banking, the unique impact of flexible capital, the importance of fearless philanthropy, and the not-so-secret powers of her approach to collaboration.

Greg Behrman, CEO + Founder, NationSwell: How did your personal and professional journey to the field of ESG begin?

Jenny Flores, Head of Small Business Growth Philanthropy, Wells Fargo: I’m an immigrant to this country; we moved to San Francisco from El Salvador when I was almost three years old. Coming to America was the promise of a better life. We were leaving a country that was war-torn and my parents knew that in America, dreams come true.

But my journey has been defined by questioning what that actually means in practice. There’s this sentiment that in America, you can do anything. But then there’s what it actually takes — that grit — to navigate an unfamiliar system and actually make something big happen.

For me, that means navigating the systems of this beautiful country alongside the people whom I ultimately want to help and serve. I went into banking wanting to learn to underwrite affordable housing because I knew housing was such an important goal for my community; having a home that is affordable and accessible is the number one priority for so many.

That’s what fuels my drive, and that’s what brought me to the industry. And in my time working within it, I’ve learned just how powerful the banking industry really is. It allows you to buy a home or go to college or start a business, so it’s at the core of enabling the American dream.  I made a very deliberate choice to stay in this industry and help influence it to better serve people like me, who have to work that much harder to become executives.

That’s the question at the core of my mission: How do I get banking to see the world through the eyes of people like me — people who may not have that natural runway?

Behrman, NationSwell: How do you make sense of this moment in ESG?

Flores, Wells Fargo: The momentum in ESG right now is going to make it extremely difficult to go backwards. The leaders of the future will need to balance profit and purpose in ways that in the past hadn’t been needed. This is no longer just about compliance — it’s about how leaders can show they’re ready to navigate the opportunities that are still nascent or evolving in a complex society.

We had a recent conversation at a town hall with our employees. We asked ourselves the question, “Are we willing to continue to double down on ESG in the face of opposition from some segments of the population?”

From my personal perspective and taking into account all of the data and the science, we need to take these factors seriously. Yes, we have our traditional oil and gas industries; and yes, they are filling a need. But we also need to transition to a way of doing things that will help a sustainable future to exist. We’re in the position to finance that, and to figure out how to scale that. And that is not something I personally think we should back down from. The banking industry is in a position to help figure out the solutions for our economy today but also for our future needs, and we’re going to do it. Our survival depends on it.

But put aside the politics and just think about it from the reality of the moment, and from the business opportunity. Any company would be foolish not to understand there is a real commercial opportunity present. ESG professionals have the ability to really influence how our understanding of this moment evolves in authentic ways that map into the business priorities that we foresee for our prospective industries: How we bring our employee expertise, how we elevate it, how we connect the dots between our business impact and our impact in the world around the issues we choose to stand by.

Behrman, NationSwell: Can you talk about some of the unique programs or initiatives that you think other ESG practitioners should know about?

Flores. Wells Fargo: Before I embark on a new initiative at any of the companies where I’ve had the privilege of working, I find that there’s this moment when I can center solutions on building equity in the system, and help executives with decision-making power to see a new or different path forward.

Speaking truth to that power is very important. About 60 days after I started at Wells Fargo, Covid came to America. I had to make a choice about how I wanted to frame the work, and I wanted to make sure that we had a shared understanding, without mincing words — not leaving anything up to assumption.

And what I said was, “The financial system as it currently exists does not serve people of color or people from diverse backgrounds well. Period.” I laid out all the reasons I’d seen in my 20-year career in banking that have made that happen, and I told my organization that though I haven’t been at Wells Fargo for very long, I would imagine that some of these reasons play out here, too. And if that’s the case, I reasoned that our response had to be very different than what we would traditionally do — because the urgent need here will grow exponentially, and it’ll grow very quickly.

Within 30 days, businesses were shutting down. The majority of those 41% were Black businesses, 36% Latino Hispanic businesses. It was very clear who was most negatively impacted.

Because of the conversations we started around driving impact for the most vulnerable and under-served , our CEO made a courageous decision: That we were going to give away all of our processing fees from participating in the first round of the Paycheck Protection Program, not even knowing what the final sum total would be.

And that’s how the Open For Business Fund started — with intention built in, and with the understanding that we should build in flexibility where, in the past, we would avoid taking quick, bold action because it was perceived as too risky. Now, we could move forward with our assumptions based in the realities of the communities we served. That’s how we designed it, and it’s been a pride point for the company ever since.

Through our roughly $420 million Open for Business Fund, we’ve reached over 178,000 businesses. 73% of those business owners are low-to-moderate income, 79% are racially or ethnically diverse, over 53% are women business owners. And you could just see the impact happening in those populations that we really sought to reach.

Behrman, NationSwell: What was the impact of those investments?

Flores. Wells Fargo: Of that money, the first $250 million was deployed as very flexible capital, which took a lot of different forms: In one example we made a grant so that the nonprofits we supported could make grants directly to small businesses; In another instance, the investment could have helped a community lender bring down the interest rate for a small business owner’s existing loan; it took a myriad of forms. Impact will be tracked through early 2025, but as of September 2022 organizations funded through the program have raised $1.7 billion dollars in grants and debt to support communities across the country — so essentially we’ve generated six times the initial investment — just based on being flexible and responsive.

The Wells Fargo dollars were catalytic because we were really fast to get into the community. The money went out as grants to nonprofits, as equity on the balance sheets of nonprofits so they could lever that money up. We focused on strengthening the balance sheet of our non-profit grantees so they were able to then absorb additional capital that they raised so that they wouldn’t be in a risky situation themselves. We also utilized loan loss reserves so that if any of those loans went sideways, they could have that on their balance sheet to protect them.

The design was really purposeful and intentional. It helped create and amplify impact. We did a lot of little things that were meaningful to support the strategies and successes of small businesses across the country.

Behrman, NationSwell: What are some other examples of unique initiatives you’re helping to lead at Wells Fargo that are yielding tangible impact?

Flores, Wells Fargo: We’re also lifting up some incredible ideas that I think have the potential to change how small businesses raise money. For example, we are funding the Small Business Exchange, or SMBX, which is a FINRA-registered funding portal and public marketplace for issuing and buying U.S. small business bonds.  The SMBX team has figured out how to help small businesses be able to issue bonds so they can raise capital. And in Washington D.C., we are testing this with the mayor, providing technical assistance to small businesses who can then go on to raise $400,000 or $500,000 as part of a bond offer.

Very often, this support will go to the ideas and leaders that have so many naysayers who challenge them and say, “How are you going to do that? It’s never going to happen.” Those are the people I love to get behind. The future holds so much promise for resilient leaders like them, but we have to think differently about how we assess risk and finance innovation.

The SMBX is just a completely different way of financing businesses, and it has the power to really engage the community. So if I want to invest, get a financial return and drive social impact, I know where to go. The due diligence is completed, and I can invest in businesses in my neighborhood that are going to create jobs and build the economic base of my city.

Behrman, NationSwell: What is it about your approach to this work that has helped you to be an effective leader?

Flores, Wells Fargo: Once something gets approved, I love going full speed on it, and I love helping others reach that velocity — even if it means sitting back and letting them take the wheel. It brings me a lot of joy to see the people around me actively in pursuit of impact, and I like to empower them to take a piece of the initiative and really lead it internally, creating visibility around it. I’m not driven by getting the credit — and not being credit-driven helps bring people to the table with me because they feel like they can collaborate more authentically and freely, and it also empowers them to step up, become advocates and changemakers, and make things happen.

Getting the credit or getting acknowledged isn’t nearly as important as getting someone else in an organization to care about the problem that you’re working on, and getting them moving to work on it in their own way. That’s how change happens in organizations. It’s not one person. It is kind of a movement that happens and then you have people everywhere marching towards a bigger goal. It makes companies better. It makes the culture come to life in a different way. I can’t begin to tell you how happy that makes me.

Basically, my secret power is that I’m a huge collaborator, and I try to do so courageously. I’ll be the first to step up and try to sell something internally, and I might get kicked in the face, but it’s okay.

Behrman, NationSwell: Who are some leaders that inspire your leadership?

Flores, Wells Fargo: My dear friend Lorena Hernandez who previously headed up community impact for Comcast in California. She’s an incredible leader, and a true champion at understanding how to ingrain ESG into the core of your business. I admire the fact that she’s always collaborating with community, and doesn’t just design from her corporate office – she’s always really out there, learning and giving back.

Another person whose wisdom I often seek is Tracy Gray, who is the Founder and Managing Partner at a venture firm called The 22Fund.  Tracy is recognized widely as a multifaceted leader in social and economic equity in finance.  She is brilliant (she is also a rocket scientist) and I have her on speed dial because she is able to break down business models like no one else. I love that Tracy can see the world for what it is and also for the potential we all have to do and be better.  . She’s always thinking about what the present needs of communities are to date, and thinking ahead to how those needs will evolve in the future. I just love talking to her because I feel like she grounds me in the short term, and then inspires me for long-term thinking.

Last but not least is Jacqueline Martinez Garcel over at the Latino Community Foundation. She’s incredible. She’s such a heart-centered leader. Anytime I have the opportunity to be near her, I feel like I leave just spiritually in a different place because she is so grounded in the work, and in how people are feeling.

Behrman, NationSwell: What are some resources that inspire your leadership?

Flores, Wells Fargo: I get inspired by people who are on their A Game, it doesn’t matter what industry they’re in. But I would say I am a big Beyoncé fan. She is heart, mind, soul, everything’s aligned to give you this experience where you feel like, when she’s performing in front of you, she’s singing just to you. Everyone leaves her concerts feeling that way. I’m inspired by how ferocious she is. I want to be that ferocious at impact. I want to be the Beyoncé of social impact.

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

ESG Next: An Interview With Nili Gilbert, Vice Chairwoman of Carbon Direct

Posted on by Greg Behrman

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 Nili Gilbert, Vice Chairwoman of Carbon Direct, to talk about her personal journey to sustainable finance, why equitable solutions are only possible with cross-sector collaboration, and why she thinks ESG won’t be enough to get us to where we need to be.

Greg Behrman, CEO + Founder, NationSwell: How did your personal journey lead you to ESG? Is there a defining life experience or circumstance that drew you to social impact work?

Nili Gilbert, Vice Chairwoman, Carbon Direct: When I was in college at Harvard, I had the opportunity to design my own major, and studied the interplay between social movements and economic progress over time — of course, economics and finance also affect society and culture, creating a kind of cycle where neither ultimately exists in a vacuum.

After I graduated, I went to work for an international development organization, which was guided by the belief that if we could build strong local financing vehicles in low-income countries, we could beneficially support communities’ visions for social progress as well.

A lot of what we were helping to create was intangible value, societal value, which it’s hard to put a price on. I eventually became obsessed with the question of how we put prices on the things that we care about in the world. I thought about it all the time; I started a dedicated journal so I could write through it. And what I realized is that, somewhere out there, there are certain people who have an outsized voice in shaping the conversation of what we value as a society.

And around the time that I turned 22 years old, I said to myself, “I’m going to become one of those people.”

Behrman, NationSwell: How do you make sense of this moment in ESG? What is promising, and what are the pitfalls?

Gilbert, Carbon Direct: I think we’re actually in a moment where we’re advancing ESG. When I first started in this field, the phrase was “mission-driven investing.” That phrase grew out of the centuries-old “socially responsible investing.” In about 2005, this all evolved into ESG.

I don’t consider myself a leader just in the ESG space anymore. After years of working hard on ESG, I came to feel that it’s not going to be enough to really get us all the way to where we need to be. Because when you look at ESG, it’s a way of taking traditional business models and reframing them. Reframing isn’t going to get us to net zero. Reframing hasn’t proven successful in addressing social inequity. As a matter of fact, we’re reaching peak global inequity, and peak greenhouse gas emissions — all after almost two decades of ESG.

Behrman, NationSwell: Does this mean you’ve started to reject ESG?

Gilbert, Carbon Direct: I’m definitely not speaking from the point of view of the anti-woke capitalism movement, and I wouldn’t say this is a rejection of ESG — although there are some strategies which are classified as ESG, which could merit more scrutiny. But if you look at many ESG factors and approaches, it’s often about the measuring and the metrics of inputs. And now, I think we’re moving towards thinking more about the outputs from the process: the implementation and the impact.

I believe this is one of the reasons the net zero movement took on so much momentum before COP26: it’s measurable against a targeted outcome on the ground — reducing carbon emissions. We can ask: Have we limited global warming to one and a half degrees or not? This is the carbon budget, how much emissions are we putting out, and how do we get that number down to zero? And I hope that we’re starting to ask clear, direct questions about social goals and outcomes as well. I would say that we just need a more goal-oriented way of thinking about actual impact instead of just counting up inputs like whether there’s a sustainability report, or how many are on the board of a company.

Behrman, NationSwell: What caused this shift in thinking?

Gilbert, Carbon Direct: It happened back during the deepest part of the pandemic, before we had a vaccine. We were all sitting at home. We didn’t know what the future held for us. The social inequities that we’ve always faced were laid so bare in how different people were affected by the COVID crisis. We had people protesting in the streets after the murder of George Floyd. The climate community was originally worried that we would fall behind on our environmental ambitions because the social concerns became so overwhelming. But that didn’t end up happening. The opposite happened.

I was sitting there thinking, how are we going to get out of this? I’d felt like I’d been doing something good and useful for the world, but had this helped? Is this helping? Where is this going? How are we going to get to where we need to go?

The Rockefeller Family institutions where I chair the Investment Committees made our net zero pledges simultaneously during the pandemic. At the David Rockefeller Fund, we were more than 90% ESG aligned, and we “took the temperature” of our portfolio, as if our investments were the whole global economy, and found that we were still in line for global warming by 2050 of nearly 4 degrees — when we know that we need to limit this to 1.5 degrees. And I was like all this ESG, all this counting up the inputs, it hasn’t resulted in the outcomes that we need.

Last month, we just reached peak greenhouse gas emissions again. We reached peak coal use. That’s what I mean when I talk about this march of progress from SRI to ESG, and how I hope we’re moving more into a focus on outcomes and impact. We have to, because the idea of what happens if we don’t get this right is unimaginable.

Behrman, NationSwell: And what’s changed for you since this shift in your thinking on ESG?

Gilbert, Carbon Direct: I took the tough decision to resign from the firm that I had co-founded a decade prior because I was so worried about the world being off course. It was so very hard to say goodbye to my team, to put down something that we built. But I thought that what would be even harder is if we all end up living in a “four degree world” with extreme inequality. And so I said, “I have to try.”

That journey brought me to Carbon Direct, a company that has two separate businesses under one umbrella. One of the businesses is Carbon Direct Capital Management, which is focused on climate solutions and investing in technologies to decarbonize industry and build the new green economy. The other business, Carbon Direct Inc., supports clients on their decarbonization journeys — from carbon reductions to carbon removals.

The way I see it is, we have this high-emitting old economy, and we know that we need to get to zero emissions by 2050 in a way that also meets our longstanding social goals. We need to rebalance out of the old economy into the new one, on time. But one thing that we don’t talk about enough is that in order to get to that new portfolio, it’s not just that we need to stop doing a lot of things, we also need to build up a whole bunch of new things which will underpin the economy of the future.

So at COP26, it was amazing to be able to represent the leadership of the Glasgow Financial Alliance for Net Zero (GFANZ), in which the finance sector had come forward with over 400 net zero pledges. GFANZ now represents over $150 trillion in capital, and almost 50% of all private finance capital in the world. The private sector, in general, came forward with thousands of net zero pledges in Glasgow, and since then we have been marching from pledges to implementation. What this looks like is moving from the top-down frameworks that we have — for example, we know we need to get global emissions to net zero, which is very top down — into real bottom-up work. It’s understanding each sector’s transition plan, which is unique based upon business models, and the technical solutions that are available to them. It’s also about understanding what regional pathways and contributions will be, which is unique based upon their starting points and natural attributes.

And at the end of the day, it’s bottom-up work, asset by asset, ton by ton of greenhouse gas emissions, that will take us down to zero.

Behrman, NationSwell: What’s something about your work at Carbon Direct that other social impact leaders should know?

Gilbert: Beyond my passion for implementation and impact, I have a strong appreciation for the fact that we can’t solve big problems like climate change in isolation. We really need to emphasize a just transition, which appreciates the deep connection between our social goals and the environmental ones. It’s not really possible to separate them, partially because of the way that the fossil economy has been built on the backs of specific communities here at home and around the world.

And so, if we want to be able to solve the climate problem, we have to go to where the emissions are, which means place-based solutions and justice. We need to understand the labor transition for workers in high emitting sectors. We need to understand the intersection of climate with gender and race.

We need to think about global justice across the north and south, where two-thirds of the remaining investments that need to be made to limit global warming to 1.5 degrees need to be made outside of North America and Europe. The Justice 40 provisions in the U.S. climate bill, the Inflation Reduction Act, call for 40% of the benefits to accrue to previously underinvested communities, and to those which will be most affected by the transition. These groups are, of course, overlapping.

One of the things that I’m most proud of in 2022 is that Carbon Direct has hired Dr. Christian Braneon as our full-time Head of Climate Justice to lead us in this work.

Behrman: Who are some leaders that you admire, and whose work and accomplishments inspire your leadership?

Gilbert, Carbon Direct: I admire Christiana Figueres, the Costa Rican diplomat and former Executive Secretary of the United Nations Framework Convention on Climate Change, for her leadership in negotiating the Paris Agreement and well beyond.

Frederick Douglass is also deeply inspiring to me. He’s known for his work in abolition here in the US and was also a leader in foreign affairs. He reminds me of what it means to “make a way out of no way.”

Lastly, the mentorship of Peggy Dulany, Chair of Synergos, and the leadership lessons of her late father, David Rockefeller, are very moving and impactful to me.

Behrman, NationSwell: What works are you reading that are inspiring you right now?

Gilbert, Carbon Direct: There’s a book of poems by Aja Monet called “My Mother Was a Freedom Fighter” that immediately comes to mind. I would also mention “The Alchemy of Finance” by George Soros and “The Structure of Scientific Revolutions” by Thomas S. Kuhn as directly informing and inspiring my perspectives on transformative leadership.

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

ESG Next: An Interview With Pete Stavros, KKR’s Co-Head of Global Private Equity

Posted on by Greg Behrman

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 Global 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 Global 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.

This story has been updated to reflect Pete Stavros’ recent promotion.