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Stakeholder capitalism: The squishy idea made more relevant by COVID-19 by Mukul Gulati

Posted on 21 September, 2020

Mukul Gulati, Managing Partner, Zephyr Peacock writes for Economic Times on stakeholder capitalism, sustainability, and impact investing.


Click here to read the full article on ‘Economic Times’

Below is an excerpt from the post which first appeared on Economic Times on 21 September 2020:


"Gradually… then suddenly" is Ernest Hemingway's famous response to the question "How did you go bankrupt?” 'Gradually… then suddenly' also describes the rapid adoption of stakeholder capitalism, sustainability, and impact investing by the world's largest investors and corporations. Climate change, persistent inequality, and COVID-19 have contributed to the increasing awareness of the private sector's responsibility to the broader community of stakeholders.

In August 2019, 181 CEOs of the largest corporations in the United States announced their commitment to explicitly move beyond shareholder primacy and commit to serving key stakeholders, including customers, employees, suppliers, and local communities. Amongst the signatories were Larry Fink, the CEO of Blackrock, the largest asset manager globally, and Jamie Dimon, the Chairman of JP Morgan, the largest bank in the United States.

Why the sudden embrace of these squishy ideas by such hardened capitalists? This movement didn't happen overnight. A gradual movement toward Environment, Social, and Corporate Governance (ESG) driven investing has been stirring for more than a decade. Businesses are noticing the impact of climate change and political convulsions resulting from the lack of economic opportunity experienced by large society sections. Low-income communities have endured the economic devastation caused by Covid-19.

In India and other emerging economies, federal and local governments have limited fiscal space and administrative capacity to address low-income populations' economic challenges. The private sector has a critical role to play in addressing the needs of underserved communities. Companies need to deliver both products and jobs for low-income populations. While the private sector alone cannot solve all of India's problems, businesses have to take the lead in formal job creation, 'inclusion,' and food security in the absence of state capacity.


Click here to read the full article on ‘Economic Times’

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Zephyr Management is a global emerging markets investment manager, specializing in the creation and management of highly focused private equity funds

Since its inception in 1994, Zephyr has sponsored and/or managed 26 investment funds in both public and private securities markets representing approximately $1.2 billion in combined commitments and assets under management

Emerging Markets Focus

The firm has initiated several private equity funds investing in several African countries, South Korea, Mexico, India, and Sri Lanka since its founding. Zephyr's funds serve medium size enterprises that are often ignored by larger private equity players. Zephyr funds provide growth capital to established companies with proven business models and sustainable competitive advantages.

Investment activities are currently focused on India, Sri Lanka and Africa.

Zephyr Peacock India

Zephyr Peacock India provides equity financing for fast growing, small to medium sized companies led by strong entrepreneurs and management teams.

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Emerald Sri Lanka Fund

Emerald Fund provides equity financing for fast growing, small to medium sized (SME) Sri Lankan companies led by strong entrepreneurs & management teams.

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Zephyr Acorn provides equity

Zephyr Acorn provides equity financing and business support to innovative early-stage companies in East Africa.

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Active Portfolio Support

The firm's special expertise lies in bringing global best practices to medium-sized growing companies by assisting them in conceptualizing sustainable business strategy, management development, compensation, ESG, expansion outside of their home country, capital structure and positioning for stock exchange listing or trade sale.