As more investors and private equity firms navigate their ESG journeys, it is increasingly meaningful for the alternative investments industry to tie ESG investments to value creation. As a result of our ratings process on over 100 PE firm ESG programs, BuildESG has identified numerous case studies that achieved both financial and social returns via revenue growth, cost reduction, improved stakeholder relations and increased productivity. Please find below an example of one such case study from a portfolio company of Graham Partners, a US-based middle-market private equity firm.
|Value Creation Case Study: TA Associates and its portfolio company, The SOLABIA Group, a manufacturer of natural active ingredients for the cosmetic, pharmaceutical, nutraceutical and microbiology industries.
GP and Portfolio Company Actions: During TA Associates’ hold period, Solabia sought out solutions toreduce its carbon footprint and energy consumption, improve its water and waste management practices and prioritize employee health and safety. Solabia not only adopted an eco-design approach to its manufacturing and plant operations but also tracks its Scope 1 and Scope 2 emissions annually, with current efforts underway to calculate its Scope 3 emissions. Additionally, Solabia made investments to improve cleaning procedures for industrial units and maintains a sorting system using dedicated collection and sorting channels for recycling and recovery. Solabia’s Health, Safety and Working Conditions Committee also diligently works to reduce the number of workplace accidents via annual safety training and chemical risk assessments.
Key Financial Results and Value Creation: As a result of these ESG investments, Solabia realized a 2.7% decrease in total gas consumption, while simultaneously increasing production by 2% between 2019 and 2020. It also achieved a 3.8% reduction in water consumption since 2018, a 10% reduction in water withdrawals over the last three years (as of year-end 2021) and a 99.5% recovery rate in 2021 in terms of waste management and recycling. Additionally, Solabia realized a 2.7% decrease in the number of workplace accidents in 2020, a 30% decrease in the severity rate of accidents based on 2019 and 2020 and a 47% decrease in the total recordable injury frequency rate from 2019 to 2020.
Finally, the Solabia case study provides a robust example of the general partner and its portfolio company’s commitment to ESG and sustainable practices, which is reflected in its score within the BuildESG Index.
TA Associates’ BuildESG Score: 2.5 (Progressing category) out of 5
Sources: BuildESG analysis and TA Associates’ Inaugural ESG Report – October 2022
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