MiddleGround Capital has integrated an ESG program throughout the firm and its portfolio companies. The program includes a dedicated ESG team, a formalized policy, an ESG committee and systems to track and measure data. The ESG policy is reviewed each year and limited partners are updated annually.

ESG is an essential part of the due diligence process at the earliest stages of evaluating a company. MiddleGround quantifies actionable items and incorporates these into the investment thesis and investment model as its develops a value creation plan. The plan includes outlining how ESG initiatives will be implemented into policies and daily practices.

The PE firm works with portfolio companies to establish annual ESG goals and corresponding KPIs at the beginning of the year through the Hoshin planning process, which consists of seven steps and is used as part of strategic planning. Goals are communicated and shared throughout the company and then put into action. In addition, ESG committees have been established at each of its portfolio companies, led by the respective CEOs, to have team members involved at the ground level.
MiddleGround uses TableCloth to track ESG data and has rolled out the reporting software, which was designed specifically for PE firms, at each of its plants across the portfolio. This allows metrics to be tracked on a regular basis and for adjustments to be made along the way to ensure that goals are met.

Mike Bridge, Director of ESG and Data Analytics

ESG is measured at the firm by tracking diversity and retention metrics and soliciting feedback from employees. MiddleGround is a signatory to the ILPA Diversity in Action and conducted a customized survey, using DEI360, to garner feedback from employees both quantitatively and qualitatively in regards to DEI. Following the survey, an action plan was put in place to sustain what it is doing well and to improve areas that need to be addressed.

“ESG initiatives can be overwhelming when thinking about the scale of action needed to implement change, but just getting started is sometimes the hardest part. Start small and be consistent,” advises Mike Bridge, director of ESG and data analytics, who joined the firm in early 2021. “Get your team involved and seek constant feedback. Don’t try to do everything at once.”

MiddleGround, which became a signatory of the UN Principles for Responsible Investment in September 2020, was also named a PE Innovator in ESG in 2021.

For our full 2022 Private Equity Innovators in ESG coverage, click here.