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PDI in the News
Forbes: Does Private Equity (PE) Have An ESG Problem -part 2?
The proposed and enacted SEC rules are a great step in the right direction but suffer from a few limitations. First, they don't cover all the topics I raise. Second, the information is not necessarily going to be available to the public. Third, the proposed rules, even if enacted, will probably get litigated and it is not obvious what set of final rules get promulgated.
So, 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 identifies these issues and recommends disclosures for LPs specifically on these topics.
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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 by Brendan Ballou, Eileen Appelbaum and Rosemary Batt and Ludovic Phalippou 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: (i) excess leverage; (ii) sale-leasebacks; (iii) dividend recapitalizations; (iv) onerous management fees; (v) related party transactions; (vi) socializing costs by exploiting bankruptcy law or by tax avoidance; and (vii) poor customer outcomes in industries with large social footprint."
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Pioneers Post: ‘We have to understand the full picture’: why investor contribution is the new frontier
Investor Contribution 2.0 is funded by Omidyar Network, and is currently focused on private capital asset classes. We spoke to Mike McCreless at Impact Frontiers – which picked up the work of the global consensus-building initiative Impact Management Project when it finished in 2021 – and Delilah Rothenburg at Predistribution Initiative. They told us why considering investor contribution goes beyond the work of an investor’s portfolio companies, why we still know so little about investors’ overall impact – and how some may be inadvertently driving up inequality.
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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. Impact Frontiers is the successor organisation to the Impact Management Project.
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?”