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The Sustainability Playbook: A private equity firm’s guide to stronger businesses
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- Case Study
- Summary
Our client is one of Europe’s leading private equity investors and a sustainability champion. With as much as 90% of a company’s environmental impact sitting with its supply chain, for instance, our PE fund client aimed to provide its portfolio companies with guidance on deploying its procurement function to deliver environmental and social sustainability improvements.
Efficio was engaged as the PE firm’s expert supply chain partner to create a Sustainability Playbook – a practical toolkit outlining strategies, measurement methods, and targets – for its portfolio companies. The result: the portfolio companies are now rolling out the actions and technologies needed to make these sustainability improvements a reality.
Objectives and results
Our PE client mandates its portfolio companies have sustainability strategies in place, including emissions reporting and actions to reduce them.
But this is often easier said than done. Many companies do not know how to define sustainability-related targets or make improvements via their supply chains – nor do they have dedicated resources or systems. Our PE client set out to tackle these challenges by producing an accessible and actionable how-to document for its portfolio companies.
The resulting Sustainability Playbook offers practical guidance on all three pillars of the Triple Bottom Line: Social, Environmental, and Economic (also known as People, Planet, and Profit). Taking a category-level approach, this document outlines how organizations can:
- Define “sustainability” in their own organization
- Use their supply base to achieve their sustainability objectives
- Identify and minimize sustainability risks in each supplier base segment
- Quantitively measure sustainability improvements
Challenges and approaches
Building a single source of truth for all organizations
The first step for the client-Efficio team was to conduct interviews with individual portfolio companies to understand where these organizations were on their sustainability journeys, the challenges they faced, and the guidance they required.
The first draft was reviewed in a series of workshops with representatives from various portfolio companies. The client-Efficio team used these workshops to test and refine the processes and tools in the playbook, making sure the guide was easy to understand and to incorporate into procurement teams’ day-to-day activities.
The resulting document offers concrete guidelines on topics including defining KPIs, updating RFPs to incorporate sustainability-related questions, and measuring progress. Since its release, our client’s portfolio companies have used the Sustainability Playbook to deliver improvements in key ESG areas, such as climate change and human rights issues.
Social sustainability in action
Since the publishing of the Sustainability Playbook, the client’s portfolio companies have been taking measures to define “sustainability” in the context of their own businesses, shape their goals, and track their progress.
For instance, multiple portfolio companies have engaged Efficio to build a platform to help them progress their social sustainability initiatives for their supply chains. Much like the CarbonCube®, this tool combines spend cube data with supplier.io data to measure diversity, helping the businesses to bring women-owned small businesses or veteran-owned businesses into their supply base. One portfolio company has already gone even further, expanding the scope of its measurement and targets beyond Tier 1 suppliers to Tier 2 suppliers.