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PDI in the News
New Private Markets: Influencers in sustainable private markets (the ecosystem)
Who are the ‘connectors’ in sustainable private markets? Who is designing the systems that facilitate sustainable investment activity? As part of our 50 Influencers list we identify individuals who, through their advice, connections or thoughtleadership, are shaping the space.
The Predistribution Initiative, a US-based non-profit, seeks to create a more equitable global financial industry and has been leading efforts to form the Task Force on Inequality-related Financial Disclosures (which recently merged with the the Task Force on Social-related Financial Disclosures to form the Task Force on Inequality and Social-related Financial Disclosures) alongside Rights CoLab and others. In doing so, it could shape the way investors report on some of the trickiest ‘extra-financial’ issues. Delilah Rothenberg, The Predistribution Initiative’s cofounder, is a key voice in the social impact conversation.
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New Private Markets: Employee ownership – primed to scale
Generational shifts and policy developments mean that employee ownership structures are ready to become more common in private markets. Work needs to be done, however, to demonstrate how these relates to specific impact goals, according to panellists at Impact Investor Summit: North America.
The Predistribution Initiative is conducting research on the relationship between different forms of employee ownership and impact, according to executive director Delilah Rothenberg. “We are undertaking some exercises where we’re starting to map the space and say: what’s the menu of options available for institutional investors within existing and emerging asset classes? What sort of return profiles? What are the pros and cons in terms of impact depending on if the investor has particular impact lens or criteria?”
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New Private Markets: Inequality is on the agenda – what now?
Rising inequality is officially on the private markets agenda. The first question is whether institutional investors – and private markets investors specifically – are genuinely motivated to address it. To quote Delilah Rothenberg, co-founder and executive director of the Predistribution Initiative, writing in the non-profit’s latest newsletter: “We often hear a common misperception: ‘Isn’t inequality good for investors?’”
It is not. For large asset owners with long time horizons and diversified portfolios, the systemic risk posed by rising inequality is material.
If the will to tackle the issue is growing, then the second question is whether investors have the tools to do so. Increasingly they do. The nascent Task Force on Inequality-related Financial Disclosures (TIFD) could do for inequality what TCFD has done for climate, encouraging investors to report comprehensively on their inequality-related risks.
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ESG Investor: Integration of Social Issues Critical to Confront Climate Change
Delilah Rothenberg, Executive Director of the Predistribution Initiative (PDI), told ESG Investor that many institutional investors may “sense that inequality – like climate change and biodiversity loss – may pose system-level risks”. But there is currently “little understanding” about how such risks manifests in financial markets, what private sector activities contribute to inequality, and how and when inequality affects investors’ portfolios.
In a recent report, the UNDP remarked that the evolution of the global financial system has created “vast imbalances” that now “pose risks” to markets and economies, and that solely using sustainable finance strategies to address climate change will be “inadequate” if interrelated social issues are not addressed simultaneously.
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Forbes: Does Private Equity (PE) Have An ESG Problem -part 2?
What kind of data should asset allocators ask for from PE firms? Two non-profits, Predistribution Initiative (PDI) and Impact Frontiers, together have launched a project that identifies these issues and recommends disclosures for LPs specifically on these topics.
In particular, the disclosures ask for data on: Compensation ratios such as the GP’s compensation to that of the mean and median worker including that of contracted labor; Fees charged to LP companies and portfolio companies; Fees charged to LP companies and portfolio companies; Policies and approaches related to tax structuring of funds; Report on lobbying and political spending during the year; Policy on stakeholder engagement to assess positive and negative impacts of investment on systemic/systematic risks; ...
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Forbes: Does Private Equity (PE) Have An ESG Problem – Part 1?
There is good PE and bad PE. The opacity of current disclosures makes it difficult to tell which is which, writes Shivaram Rajgopal. "Public pensions funds have also been vocal about ESG concerns in the public equity industry. Some, including me, have argued that this dynamic ironically creates a market for reporting arbitrage. Public companies, who hold assets with dubious ESG characteristics (greater carbon emissions or labor hidden in private entities with no public audit trails), have incentives to sell these assets to private equity to escape reporting pressures. On top of that, concerns have been raised questioning whether the returns claimed to be delivered by private equity are real and even if they are real, are these excess returns in private equity earned by one or more of the following dubious techniques...
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Sorenson Impact Center: Rethinking our Economic Systems – A Conversation with Global Impact Leader Delilah Rothenberg
In this Q&A, Delilah Rothenberg, an inaugural member of the Global Impact Leadersgroup, discusses the need for system-level change in how we conduct business and structure markets in order to solve critical issues.
"We take a “macro-to-market” approach. This means engaging in projects like Beyond Bretton Woods, which contributes to the global conversation on rethinking our economic systems, and other projects that create specific tools for investors to implement change. For instance, through a consortium of organizations developing a Taskforce on Inequality-related Financial Disclosures (TIFD) and through our Investor Contribution 2.0 project with our partners at Impact Frontiers, we are helping to steward the co-creation process of disclosures that can support investors in better understanding their contributions to systemic and systematic risks."
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Pioneers Post: ‘We have to understand the full picture’: why investor contribution is the new frontier
“Investor contribution” – a concept some also refer to as “additionality” – is under the spotlight, as part of the Investor Contribution 2.0 project.
Behind this “consensus-building” initiative are Impact Frontiers and the Predistribution Initiative, a nonprofit that supports institutional investors. Together, they hope to get more specific on what investor contribution means and on how to manage it. They’re not trying to create standardised metrics for investor contribution – which by its nature is context-specific – but rather to standardise an expectation that investors carefully consider certain elements of investor contribution; even if they aren’t always able to answer these questions, they can then communicate what they do and do not know.
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Responsible Investor: Groups exploring social and inequality TCFD equivalents announce mergerResponsible Investor:
The Taskforce on Inequality-related Financial Disclosures (TIFD) and the organisations preparing a Taskforce on Social-related Financial Disclosures (TSFD) are consolidating efforts into a single initiative. Plans for TIFD were first announced in 2020 with the aim of providing guidance, thresholds, targets and metrics for companies and investors to measure and manage their impacts on inequality, as well as the impact of inequality on company and investor performance.TIFD is led by an interim secretariat that includes the Argentine Network for International Cooperation (RACI), Predistribution Initiative (PDI), Rights CoLab, Southern Centre for Inequality Studies (SCIS), and United Nations Development Programme (UNDP).
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ESG Investor: Consultation on Measuring ‘Investor Contribution to Impact’ Launched
The new project on measuring ‘investor contribution to impact’ is being led by Impact Frontiers and the Predistribution Initiative (PDI), a non-profit focused on investment structures that share more wealth with communities and workers.
Delilah Rothenberg, Co-Founding Partner at PDI, said it had launched the project to address a gap in the impact investment market for investors.
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New Private Markets: In brief: Get under the skin of systemic sustainability risks
“Two organizations – the Predistribution Initiative and Impact Frontiers – are working on a framework to manage sustainability risks born from the way we currently invest; they want input from LPs and GPs.”
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Buyouts: Private equity could fall afoul of Florida’s new ESG investment ban
ESG and impact investing organizations are taking note as America's fourth biggest pension system acts against the movement.
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Private Funds CFO: Tax takes its place in ESG
Investors need better tools to measure and manage responsible tax practices.
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ImpactAlpha: Is private equity’s employee ownership plan the real deal?
Many impact investors want to address the growing wealth gap that is undermining democracy and economic stability in the U.S. But if employees get a small percent of the equity shares in a private equity portfolio company, while executives get a lion’s share, the wealth gap will continue to grow. “This is not the solution,” says Delilah Rothenberg of The Predistribution Initiative (PDI).
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ImpactAlpha: Expanding the ‘S’ in ESG to account for the full scope of corporate impact on workers and communities
From the Great Resignation to the historic worker-organized unionization of an Amazon warehouse in Staten Island, N.Y., worker empowerment represents an increasingly important lever for corporate accountability.
The bottom-up grassroots energy, combined with top-down government action, creates a unique opportunity to advance the conversation around the role of corporations in society and the ‘S’ in ESG […]
As we consider the multiple dimensions of private sector activity with social impacts, it is important to not only look at companies, but also account for investor-level influences, which can often disincentivize or inhibit companies from acting responsibly, says "the Predistribution Initiative’s Delilah Rothenberg.
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Next City: Former Wall Street Pro Says to Tackle Inequality, Start With Changing Wall Street
The Predistribution Initiative is devoted to reducing inequality by changing the basic business practices of Wall Street. What will it take for it to succeed? Delilah Rothenberg has obsessed over inequality since her college years at NYU, where she studied neo-colonialism and neo-imperialism as a triple major in history, politics and African Studies [...] Rothenberg quit her private equity job in 2018 to co-found The Predistribution Initiative, devoted to reducing inequality by changing the basic business practices of Wall Street. “It’s complex and it’s not something you can show a picture of in real life like a hungry child or a vulnerable woman,” Rothenberg says.
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New Private Markets: ‘Regulatory arbitrage’ threatens private markets if SEC does not keep pace
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The Predistribution Initiative, a US-based non-profit organisation seeking to create a more equitable global financial industry, hosted the virtual discussion, which covered recent and upcoming rules proposals from the US Securities and Exchange Commission […]
According to Delilah Rothenberg, The Predistribution Initiative’s executive director, regulatory loopholes do not stop at environmental reporting.
“Inequality is growing at a systemic level,” Rothenberg said. “If portfolio companies are burdened with too much debt, will they be in a position to offer quality jobs and affordable goods and services?”
She added: “Is extracting value from companies taking away from the company’s ability to operate and serve its corporate purpose... is fund manager compensation growing at an exponentially faster rate than for workers of portfolio companies and beneficiaries of the LPs?”
New Private Markets: Why tax is creeping up the ESG agenda
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Predistribution Initiative, a US-based non-profit organisation supporting financial industry reform, is helping to launch the framework to help reduce “systemic risks to the health of the overall economy”, Delilah Rothenberg, the group’s executive director, told New Private Markets in an interview in January.
TIFD is not expected to launch for a few years. In the meantime, Rothenberg said more work is needed to better understand which practices are fair or foul.
“The industry needs to think about how the funds of private equity managers are structured and whether those funds are structured to avoid paying taxes,” she said. “Where do you draw the line between taxefficiency and irresponsible tax practices?”