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• Case | HBS Case Collection | April 2019

  Aperture Investors

  Krishna G. Palepu, George Serafeim and David Lane

  Aperture Investors is a startup investment firm that seeks to disrupt the asset management industry through competitive differentiation by charging investors primarily when its portfolio managers outperform the marketplace. Headed by Wall Street veteran Peter Kraus and backed with substantial and patient seed capital, Aperture seeks to attract both star portfolio managers and assets from mutual funds and hedge funds. Kraus believes that his innovative business model addresses the current dysfunctional fee and incentive structures in the industry, which have led to long-term market underperformance, and that Aperture will address the reasons that are motivating investors to shift to cheaper, passively-managed index and exchange-traded funds.

  Keywords: Business Model; Talent and Talent Management; Investment; Investment Funds; Asset Management; Recruitment; Selection and Staffing; Marketing Channels; Emerging Markets; Partners and Partnerships; Motivation and Incentives; Financial Services Industry;

  Citation:

  Palepu, Krishna G., George Serafeim, and David Lane. "Aperture Investors." Harvard Business School Case 119-053, April 2019.  View Details

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• Technical Note | HBS Case Collection | March 2016 (Revised April 2019)

  ESG Metrics: Reshaping Capitalism?

  George Serafeim and Jody Grewal

  In the past twenty-five years, the world had seen an exponential growth in the number of companies reporting environmental, social and governance (ESG) data. Investor interest in ESG data also grew rapidly. A growing belief that increasing levels of social inequality and natural environment degradation were pressing problems that the capitalist system was failing to resolve had led many stakeholders to advocate for changes in measurement and corporate reporting as a potentially powerful “lever” that could move the discussion from “Reimagining” to “Reshaping” Capitalism. Some suggested that increased transparency could change corporate behavior, increase corporate accountability and lead to better outcomes for employees, customers, the environment and local communities. Others suggested that ESG data were value relevant from an investor standpoint and that firms “doing good would do well.” According to this view, investors that used ESG data would be able to make better investment decisions and widespread disclosure of such data would improve market efficiency. However, some commentators doubted the sincerity of company ESG disclosures and suggested that firms that did good were less competitive, and therefore earned lower returns for their shareholders. As the business community entered the second half of the second decade of the twenty first century, whether the widespread adoption of ESG metrics would happen -- and whether, if it did, it would lead to systematic change -- was very much an open question.

  Keywords: Capitalism; sustainability; accountability; corporate social responsibility; Responsibilities to Society; environment; social impact investment; ESG; Corporate Social Responsibility and Impact; Environmental Sustainability; Measurement and Metrics; Integrated Corporate Reporting; Corporate Accountability; Accounting; Economic Systems;

  Citation:

  Serafeim, George, and Jody Grewal. "ESG Metrics: Reshaping Capitalism?" Harvard Business School Technical Note 116-037, March 2016. (Revised April 2019.)  View Details

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• Case | HBS Case Collection | November 2017 (Revised April 2019)

  Summa Equity: Building Purpose-Driven Organizations

  George Serafeim and David Freiberg

  In 2015, Reynir Indahl left top Nordic private equity firm Altor Equity Partners to found Summa Equity (Summa). After long contemplation following the financial crisis, Indahl was convinced the financial system was producing negative externalities and that the current private equity model adopted by most firms would no longer be successful. Summa was developed under a new private equity model that sought to “future-proof” businesses by focusing on long-term value creation and growth, in addition to traditional private equity practices of implementing best practices and productivity improvements. To find businesses best suited for long-term growth with disruptive potential, Summa invested in four thematic areas that were mapped to megatrends outlined in the United Nations Sustainable Development Goals (SDGs)—trends Summa believed presented long-term growth opportunities for businesses that presented commercial solutions for these challenges. In addition, Summa integrated Environmental, Social and Governance (ESG) issues to create value during the ownership phase and expand multiples. While ESG investing was practiced by many firms with a focus on compliance and reporting, Indahl wanted ESG to be a tool for value creation and growth. After a period of successful recruiting, fund raising, and deal completion, Summa needed to develop a set of practices and expectations across portfolio companies and partners. The case concludes with Indahl contemplating exiting Summa’s first company. What should Summa look for in a buyer? Is sale price all that matters, or should a potential buyer share Summa’s focus on building purpose-driven organizations with a positive social impact on the world? How can Summa maximize its impact, both through investment and voice? With impact investing taking off a critical question also was how to measure and report impact to its Limited Partners (LPs).

  Keywords: corporate purpose; ESG; ＂ESG (environmental, social, governance) performance; social impact; social enterprise; private equity; investment management; finance; capital markets; management practices; leadership; innovation; entrepreneurship; voice; Environmental Impact; value creation; Private Equity; Social Enterprise; Finance; Capital Markets; Management Practices and Processes; Innovation Leadership; Leadership; Innovation and Management; Entrepreneurship; Mission and Purpose; Value Creation; Financial Services Industry;

  Citation:

  Serafeim, George, and David Freiberg. "Summa Equity: Building Purpose-Driven Organizations." Harvard Business School Case 118-028, November 2017. (Revised April 2019.)  View Details

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