tbli asia 2015 - lalit matai - sustainability & risk management
TRANSCRIPT
Introduction TAU brings capitalist solutions to capitalism’s greatest failures
• TAU is a private equity firm established to generate above-market returns by upgrading global supply chains, with the first fund focused on the $780 billion textile/apparel manufacturing industry
• TAU seeks to increase manufacturers’ profitability and scale, improve the lives of workers and the environment, and deliver superior returns to investors.
• Partnerships with leading brands and retailers in the US and Europe help to identify investable suppliers and provide secure sources of revenue for future portfolio companies.
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Intensifying global consumerism
manufacturers’ mismanagement of social
and environmental capital
Inefficient operations and high turnover
High failure to deliver ‘on time and
in full’
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….meets inadequate supply chains.
Global textile & apparel industry dynamics
High cost of capital
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higher consumer expectations for fast retailing and “on trend”
products
More product diversity and complexity
Rising baselines and customer demand for
compliance & sustainability
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Rising costs and downward price
pressure
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TAU will bring resources Capital • Long-term equity • Fresh capital injection to fund capex and • Operational improvements • Liquidity for owners • Enhanced access to credit
Expertise • Transformation/sector expertise plus a
stable of global garment experts • Proven solutions tailored to culture and
context Customers • Work with major brands to build deal pipeline
and secure investee revenues • Transformational goals align with brands’
sourcing needs
Policy • Work with advocacy groups and regulatory
bodies to support favorable supply chain policy
Consumers • Alliance with consumer movements to drive
awareness and increase demand
Investors • Strategic or control stakes in established
companies: hands-on transformation
• Active dividend policy
• Risk mitigation: holdbacks, SPVs, strong governance, relationships with revenue sources
• Exits: secondaries, rollups or IPOs with value upshift from transformation
Influence the ecosystem And create value
CHANGE MANAGEMENT AND PROJECT MANAGEMENT
CAPACITY INCREASES AND EFFICIENCY IMPROVEMENTS
MARKETING/MARKET EXPANSION
LABOR CONDITIONS/HR MANAGEMENT/ECO-EFFICIENCIES
IT AND INDUSTRIAL TECHNOLOGY SOLUTIONS (TAU-24)
STRATEGY
INVESTMENT STRATEGY
TAU’s Approach to ESG and Impact
COMPLIANCE
IMPACT PLATFORM
STRATEGIC ENVIRONMENTAL & SOCIAL INITIATIVES
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Compliance
MATERIAL ESG RISKS • Fire and other structural safety issues • Child and forced labor and other worker abuse • Wage payments – minimum wage, and illegal overtime • Unauthorized subcontracting • Water pollution and emissions
MECHANISMS • Allocation of capital to remediate • Appointments of key ESG staff • Remote monitoring through metering, sensors • ERP systems to manage production capacity, order flow,
and ensure full transparency • Environmentally-friendly textile dyeing techniques
COMPLIANCE
IMPACT PLATFORM
STRATEGIC E&S
As a direct investor, TAU is uniquely placed to ensure compliance with local laws and international labor and environmental standards
Strategic E&S Initiatives
• Efficient use of energy and water: Upgrades to high efficiency boilers, and other energy-efficient machinery and servomotors can dramatically decrease energy use. Smart grids and metering monitor energy and water use and track quality of wastewater
• Textile waste reduction: LEAN manufacturing can reduce defect ratios, and auto-CAD machines can increase productivity 10-20x while reducing material costs
• Training and career development: Supervisor training programs in HR, production and quality management have reduced worker turnover by 52% and absenteeism by 34% in select factories
• Health: Investments in worker healthcare education have been shown to have $4:$1 returns, and anemia interventions can increase productivity by 8%
TAU has identified a number of environmental and social initiatives that also have high returns on investment
COMPLIANCE
IMPACT PLATFORM
STRATEGIC E&S
Sources: BBW project, BSR HERhealth project, Tufts anemia study
Impact Platform
• Family healthcare • Financial inclusion • Affordable housing • Child education • Mobile connectivity • Transportation solutions • Access to clean water & sanitation
TAU is engaged with one of the world’s largest pharmaceutical companies to provide comprehensive healthcare services to all of TAU suppliers’ workers
COMPLIANCE
IMPACT PLATFORM
STRATEGIC E&S
TAU sees garment factories as key development infrastructure to provide services to workers in the home and to their families