5 Feb 2024

PEI Keynote Interview: Strategic Sustainability in Action

“For consumer-facing companies, sustainability is crucial for customers and regulators, and can also be important for investors seeking to protect and enhance value.”
Adinah Shackleton
Head of ESG
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A collaborative approach to setting and driving forward ESG priorities can build long-term value for a business and its stakeholders, say Adinah Shackleton at Permira and Federica Ruzzi at portfolio company Golden Goose.

In 2020, the Permira funds invested in Golden Goose, a next-gen luxury brand that is best known for its iconic sneakers. Permira’s head of ESG, Ad­inah Shackleton, and Golden Goose’s chief sustainability officer, Federica Ruzzi, talk through their sustainability journey so far and discuss the impor­tance of meaningful ESG engagement for consumer-facing companies.

What role did sustainability play in Permira’s due diligence of Golden Goose and in its decision to invest?

Adinah Shackleton: Permira was drawn to Golden Goose first and fore­most for its compelling investment case, and sustainability was a critical component of this. We wanted to un­derstand the company’s approach to areas including leather sourcing and supply chain management. We also wanted to ascertain the maturity of the company’s sustainability strategy, team and positioning with customers.

We saw real potential for Golden Goose to do more in the sustainabil­ity space, in particular by focusing on strategic sustainability initiatives that we knew would be increasingly impor­tant to the business as it grew. For con­sumer-facing companies, sustainability is crucial for customers and regulators, and can also be important for investors seeking to protect and enhance value. Pre-investment, we could already see that sustainability would play an im­portant role when the Permira funds came to exit.

In 2022, Golden Goose unveiled its Forward Agenda – a series of sustainability goals it intends to meet by 2025. What do those goals entail from an environmental perspective?

Federica Ruzzi: Empowering people has been Golden Goose’s commitment for over 20 years. We have always been devoted to people. It is what has in­spired our sustainability vision – the Forward Agenda – aimed at tackling some of the most pressing challenges facing the world, and at creating posi­tive change through the engagement of our community.

The Forward Agenda focuses on four main drivers to help integrate en­vironmental and social concerns into our business operations. First, we in­novate, by which we mean embracing the circular economy. Then we craft, which is all about celebrating tradi­tional craftmanship. The third pillar of our strategy is we care. We place people and the planet at the centre of everything we do. Fourth, we share, which means working with, and giving back to, our communities.

Based on these four fundamental tenets, Golden Goose has introduced 10 clear-cut goals for 2025, in order to reduce its environmental impact by using energy from renewable sourcing, adopting responsible materials and tracing raw materials.

Meanwhile, in 2022, we decided to further substantiate our commitment to fighting climate change by setting scientifically defined reduction targets via the Science-Based Targets initiative (SBTi). The near-term emissions re­duction targets that were validated by the SBTi in March 2023 involve a 70 percent decrease in absolute Scope 1 and Scope 2 greenhouse gas emissions by the end of 2030 when compared to a baseline year of 2021, in line with the 1.5C scenario, as well as a 40 percent reduction in Scope 3 emissions per pair of shoes manufactured over the same timeframe.

AS: In addition to focusing on the sustainability strategy, one of the are­as that was particularly important for Permira was climate. As part of the sustainability strategy discussed with the board, we were keen for Golden Goose to increase ambitions around climate and raise science-based targets up the agenda. We saw this as a key op­portunity to create value by looking at the business through an environmental lens. Having science-based targets in place is also becoming increasingly im­portant at exit.

What do the goals entail from a social perspective?

FR: As part of the Forward Agenda, we are aware of the immense respon­sibility that we, as a company, have towards society and the challenges it is currently facing, with the protection of human rights standing out as one of the most urgent issues of our time. We acknowledge that it is more important than ever for companies, especially those in the fashion industry, to protect people’s rights and support their devel­opment and growth, while preventing any form of complicity in human rights violations and taking steps to mitigate potential adverse impacts along the entire value chain. We aim to achieve level three or four of the Social Com­pliance Standard, which is rated on a scale of one to four, with four being the highest, for at least 80 percent of direct suppliers and strategic sub-suppliers.

The Forward Agenda also encom­passes dedicated, awareness-raising initiatives aimed at fostering and en­hancing diversity, while promoting an

Can you provide an example of how you are putting sustainability ambitions into action at Golden Goose?

FR: After announcing its Forward Agenda, Golden Goose took its first step under the ‘we care’ driver, unveiling its innovative retail space, the Forward Store. Conceptualised with the ambition of lengthening the product life cycle by giving products a new life, the Forward Store features new responsible experiences. An artisanal approach and a range of interactive activities co-exist here, giving clients the chance to embark on a sustainable journey revolving around four pillars: repair; remake; resell; and recycle. With the Forward Store, Golden Goose takes the lead in the world of repair, through its calzoleria (cobbler) and sartoria (tailoring) services, opening the first laboratories in which anyone can bring sneaker products and garments from any brand for repair, replacement, restoration and refurbishment services, among others, lengthening the product life cycle and thereby reducing the impact on the planet.  

inclusive culture and empowering local communities.

How did Permira and the Golden Goose management team work together to define its sustainability priorities?

FR: We are constantly working togeth­er, and we share every step of this amaz­ing journey. Particularly at the begin­ning, Permira supported us a great deal by sharing macro trends and expecta­tions from the financial world. This information helped us build a broader vision that took the expectations of dif­ferent stakeholders into account.

AS: As a private equity investor, Per­mira has board seats and so we were able to provide input to the man­agement team as it was refining and presenting its sustainability strategy. Meanwhile, supporting the manage­ment team in hiring a sustainability lead was one of our first priorities for the business when the funds invested. We were collectively looking for a leader to develop and drive the strategy forward. When Federica joined, we spent time together discussing the strategy, prior­ities and the investor perspective. We also acted as a sounding board along the way and shared what has worked well for other portfolio companies in the sector – either on specific topics or the strategy overall.

How is Permira now working with the company to help make these ambitions a reality?

FR: Permira has always believed strongly in the value of sustainability and supported us hugely since the in­vestment. Not only are we in constant dialogue with Adinah, but we also re­port regularly on the progress of our various projects at the board level.

Our board is composed of nine members, including four from Per­mira, and sets the direction of our sustainability and diversity, equity and inclusion strategies, providing strategic guidance and approving medium and long-term targets.

Within the board, we have iden­tified three board sponsors who help drive the board’s engagement on sus­tainability matters and ensure that sustainability is integrated in every decision-making process. One is our chair, former Chanel CEO Maureen Chiquet, another is our chief executive, Silvio Campara, and finally there is a non-executive director representing Permira. We have also worked with ESG ratings provider Sustainalytics to review our progress, and we’re proud that Golden Goose was recently rated as the number one brand in their foot­wear sub-industry.

Do you believe that sustainable companies command higher valuations and generate better returns for investors? How close are we to proving this correlation?

FR: I think that rather than simply re­ferring to a sustainable company, it is more relevant to engage around the topic of responsibility more broadly. This helps build strong relationships with suppliers, strengthen processes, mitigate risks and innovate for the long term. These are all points that can have a tangible impact when it comes to re­inforcing the value of a business.

AS: Fundamentally, we believe that companies that manage sustainability issues well will be more successful in the long term. In contrast, there can be financial implications for companies that lack appropriate controls around ESG, such as loss of customers or dam­age to brand value. In terms of proving the correlation between sustainability and higher valuations, there is more work to do in private markets on this area and as ESG data continues to im­prove, we will have more opportunity to demonstrate this.

What value do you think the private equity ownership model brings when it comes to sustainability in particular?

FR: It depends on the maturity lev­el and the heritage of a company. If a company has strong values, the private equity ownership model certainly helps to accelerate the integration of sustain­ability in the business. Moreover, the ability for a chief sustainability officer to have a discussion with their private equity partner at any given point in the company’s life cycle represents a stim­ulating opportunity that continually helps raise the bar.

In Permira's case, I also consider the networking opportunities with oth­er portfolio companies that have been available to be extremely valuable. It is a great opportunity to connect with other brands in other industries that share the same values. In addition, Per­mira takes part in a number of inter­national roundtables and associations, and because of this we are constantly updated on regulatory developments. This is truly valuable for us given how quickly sustainability regulations are evolving. n

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