Newsletter from the Council for Inclusive Capitalism

The Council for Inclusive Capitalism was founded on a set of values designed to build a dynamic and trusted economic system through ethical business leadership. Our aim has been to ensure that prosperity is fairly shared and responsibly invested to create sustainable growth. These core values are essential not only to the moral imperative of inclusive capitalism, but also to the market imperative of long-term value creation for all societal stakeholders, including future generations.

As we each pursue principle-based growth through inclusive capitalism within our companies, industries, and sectors, we are collectively committing to a fairer economy and each contributing to a system which integrates morals and markets—profit and purpose.

As a global and historic movement, we can also unearth the principles of inclusive capitalism throughout history, cultures, and economies. One hundred years ago in Japan, the historic venture capitalist Shibusawa Eiichi founded his businesses—including some of the world’s first joint-stock companies—on his philosophy of gappon-shugi, loosely translated as ‘community capitalism,’ tying the pursuit of shareholder profit to social responsibility and environmental sustainability.

Like gappon-shugi, the Council for Inclusive Capitalism is a community-led effort that elevates the ingenuity of individual leaders and principled businesses to profitably address societal challenges. This is the spirit of the documentary The Purpose of Capitalism, which brought me together with Council Steering Committee member Hiro Mizuno, London Business School Professor Alex Edmans, and others to explore how historic teachings connect us to the future of capitalism.

In this spirit of collaboration and globalization, the Council for Inclusive Capitalism looks forward to learning from our members around the world, through the examples exchanged within our newsletter, commitments shared on our website and your individual stories.

All my best,

Lynn Forester de Rothschild
Founder and CEO

Watch the trailer for The Purpose of Capitalism: Lessons from Japan or view the full documentary here.

THE COUNCIL IN ACTION:
PIONEERS OF ETHICAL LEADERSHIP

As the Council for Inclusive Capitalism continues to champion ethical leadership and responsible business practices, we are proud to highlight two exemplary organizations that embody our mission. These profiles showcase how a purpose-driven mission and transformative idea can drive meaningful change in the business world.

OWNERSHIP WORKS | PIONEERING INCLUSIVE CAPITALISM THROUGH SHARED OWNERSHIP

What if every employee could directly share in the wealth creation they help drive? This transformative idea fuels Ownership Works, a nonprofit pioneering ethical leadership through broad-based employee stock ownership, as recently profiled on CBS’s 60 Minutes. Led by Peter Stavros, Ownership Works is restructuring businesses to integrate shared ownership, proving that a more equitable approach to capitalism is not only possible but beneficial for all.

Inequalities Demand Action

In the U.S., wealth inequality has reached extreme levels, undermining economic mobility and prosperity for millions. Consider:

• The top 10% own 76% of the nation’s wealth, while the bottom 50% hold just 2%. (Source: World Inequality Report)

• The typical White family owns nearly 8 times the wealth of the typical Black family due to systemic barriers to building assets like stock investments. (Source: Economic Policy Institute)

• 37% of Americans can’t cover a $400 emergency expense. (Source: Federal Reserve)

Solving this crisis requires bold, innovative solutions to democratize ownership and broaden access to wealth creation opportunities.

Proven Impact Through Employee Ownership

Ownership Works’ shared capitalism model delivers societal and business impact:

• 88 companies have transitioned to broad-based employee stock ownership programs (ESOPs), enabling 111,658 employees to share $395 million in generated equity, including over $130 million in direct wealth-building benefits specifically for low-to-moderate income workers.

• After adopting the model, employee engagement at Ingersoll Rand soared to over 90%, safety incidents fell by 71%, and attrition rates dropped from 19% to about 3%. Financially, the firm saw its EBITDA rise from $380 million to an expected $1.185 billion, with a stock price nearly tripling and enterprise value increasing from $3 billion to about $27 billion. (View Case Study)

• The shared ownership program at C.H.I. Overhead Doors drove significant operational improvements—doubling sales, increasing profitability by 800 basis points, and reducing safety incidents by 50%. One employee, who faced cancer, shared, “I worked all my life and then all of a sudden I wanted to retire, and this gave me the opportunity to get the coverage I needed to go on with my life without a job, which was the scariest thing.” (View Case Study)

By granting employees true equity stakes, ESOPs incentivize engagement and create corporate cultures of ownership rather than apathy. Companies experience significant operational improvements while workers share in successes.

A Roadmap for Ethical, Inclusive Capitalism

In the TED Talk shared below, Peter Stavros shares personal stories of his own journey, the profound impact of doing this work, and how business leaders can restructure their companies through this transformative model. Through ethical leadership, Stavros is helping companies realize the core promise of stakeholder capitalism—aligning employee, business, and societal interests rather than pitting them against each other.

Watch “The Secret Ingredient of Business Success” and learn how shared ownership can revolutionize your business and transform lives.

Click here to learn more about how Ownership Works helps companies foster more financially inclusive and resilient workforces through shared ownership programs.

TOWERBROOK CAPITAL PARTNERS | A VANGUARD OF RESPONSIBLE OWNERSHIP AND INCLUSIVE CAPITALISM

What does it mean to be a responsible investor in today’s economy? In the competitive realm of private equity, TowerBrook is providing a powerful answer, demonstrating that responsible ownership is not only ethical but also a key driver of long-term value creation. With over $23.9 billion of capital raised across 12 funds since inception, TowerBrook partners with 51 portfolio companies employing over 192,500 full-time workers and generating a combined revenue of over $38.2 billion. Through its commitment to responsible ownership, TowerBrook is setting new standards across a broad scope of industries.

A Purpose-Driven Ethos

Responsible ownership is the integration of ethical leadership principles into business strategies to benefit all stakeholders. The essence of TowerBrook’s mission is to protect and grow investors’ capital by partnering with management teams to build companies that positively impact society, creating sustainable value for everyone involved.

A Holistic Approach to Responsible Ownership

TowerBrook’s commitment to responsible ownership is evident across its portfolio. The firm was the first in its industry to become a certified B Corporation in 2019, meeting rigorous standards of social and environmental performance, transparency, and accountability. This ethos extends to its portfolio companies, with four achieving B Corp certification in 2023.

The firm’s focus on responsible ownership is comprehensive, covering critical areas such as human rights, ethical AI deployment, employee equity and engagement, and environmental stewardship. Portfolio companies like CarTrawler and KeHE Distributors have implemented inclusive employee ownership programs, while others such as AustroCel Hallein and Aernnova have made significant strides in tracking and reducing their environmental impact.

Leading the Way in DEI

TowerBrook recognizes the critical importance of diversity in driving business success. A McKinsey study shows that companies in the top quartile for ethnic/cultural diversity on executive teams are 36% more likely to outperform their peers, while gender-diverse teams have a 25% higher likelihood of outperformance. In line with this evidence, TowerBrook has established clear DEI targets, such as aiming for at least two women on every controlled portfolio company Board by 2025.

The firm’s commitment to DEI extends further, as demonstrated by its nine employee-led affinity groups that promote cultural awareness, allyship, and inclusion. Partnerships with organizations like The Opportunity Network and 10,000 Black Interns provide investment-facing internships for underrepresented talent.

TowerBrook’s dedication to advancing DEI has earned recognition, including a top score in the Human Rights Campaign Foundation’s Corporate Equality Index and consistently high ranking in Equality Group’s PE & VC Inclusive Index. Karim Saddi, Co-CEO of TowerBrook, emphasizes, “Improving our team’s diversity is an ongoing, firmwide initiative. Every single one of us at TowerBrook has a role to play in building and cultivating an inclusive culture which promotes respect for others and encourages new ideas and perspectives.”

A New Ownership Playbook

TowerBrook’s forward-thinking approach positions the firm as a leader in the private equity space. By demonstrating the tangible link between responsible ownership and enhanced financial returns, TowerBrook is paving the way for a new era of purpose-driven investing.

With a proven track record of building better businesses, a steadfast commitment to positive societal impact, and a culture that embraces diversity and inclusion, TowerBrook Capital Partners is not just shaping the future of private equity—it is redefining what it means to be a responsible investor in the 21st century.

Discover More About TowerBrook’s Approach:

Responsible Ownership Report: Click here to discover why and how TowerBrook embeds responsible ownership strategies across its investment processes and the positive impacts of these practices.

Diversity, Equity, and Inclusion Report: Click here to review TowerBrook’s progressive efforts to foster diversity, equity, and inclusion both within its organization and through its investment portfolio.

Operating Principles for Impact Management: Click here to learn more about the global standards TowerBrook upholds to ensure a disciplined approach to impact investing.

RESOURCE HIGHLIGHT

EMPOWERING INCLUSIVITY: A ROADMAP FOR UNLOCKING THE ECONOMIC POTENTIAL OF MSMES IN COLOMBIA

Building Markets presents an insightful report on the state of micro, small, and medium-sized enterprises (MSMEs) in Colombia, with a special focus on those owned by migrants and internally displaced persons (IDPs). This comprehensive resource offers valuable insights into the barriers and needs faced by these businesses and identifies opportunities for organizations to make a meaningful impact in this vital sector.

Download the full report to discover how you can contribute to empowering vulnerable populations through business development in Colombia.

Upcoming Events

GreenFin24
June 17-19, 2024 | Javits Center, New York, NY, USA

The Council for Inclusive Capitalism is proud to partner with GreenFin24, the premier sustainable finance event. Join the growing community of leading finance, investment, and sustainability professionals harnessing the power of capital markets to realize a net zero economy at this year’s GreenFin24.

Learn more and register with our 10% off discount code GF24CIC. Click here to register.

Welcome New Council Members

The Council for Inclusive Capitalism is now 611 members strong. Learn more about our newest members.