Social Responsibility-Oriented Investors Back Effort to Transform Supply Chains
Tau Investment Management launched an effort last fall to raise and commit $1 billion to transform global supply chains by improving manufacturers’ social, environmental and operational performance. The New York firm recently received a significant boost as two “anchor investors” – philanthropist Alexander Soros and The Global Emerging Markets Group, or GEM – joined the effort.
Tau, founded and led by CEO Oliver Niedermaier, says it “uses capitalist solutions to address capitalism’s worst failure: the undervaluation of human capital and natural resources.” The investment firm aims to transform the supply chains of several industries, starting with garments and textiles, and eventually turning to consumer electronics and agribusiness.
As part of a Clinton Global Initiative Commitment to Action, Tau plans in the next three years to use capital and expertise to turn around the frontier and emerging-markets factories and supply chains of major global apparel brands. “Such transformations will yield improved transparency, greater dignity for workers, cleaner environments for communities, and enhanced performance and value for stakeholders,” the firm said in September.
On Jan. 13, Tau announced that alternative investment firm GEM and Soros – son of financier and philanthropist George Soros and managing partner of Soros Brothers Investments – have become anchor strategic investors in the effort.
“Our new allies send a strong message to the investment community that there are credible opportunities to create value through the reformation of supply chains,” Niedermaier said in a press release. “Mr. Soros’s and GEM’s participation in Tau is further validation that our model – centered on turning around underperforming entities in global supply chains – can yield superior returns for investors.”
In addition to making a strategic investment through a private investment firm that he leads, Soros also will serve on Tau’s advisory board, which is separate from its investment committee.
“Tau has created a wholly unprecedented turnaround and growth equity vehicle,” Soros said. “Beginning with the apparel trade, there are countless opportunities for revaluing companies within industries that until now have grown fast, grown dirty, and are in need of fundamental change. Tau has convened extraordinary talent to execute a disruptive thesis that will drive that change, and profit from it.”
GEM’s strategic investment and partnership will enable Tau to execute on investment opportunities around the world, and includes other collaborative endeavors, according to the release.
Chris Brown, GEM founder and director, cited Tau’s combination of “transformational expertise, deployment of growth equity capital, and connection of suppliers with buyers in quantity” as reasons his firm decided to work with Tau.
“We are incredibly impressed by their assembly of talent and their laser-like focus on supply chain issues,” Brown said.
Tau and GEM are evaluating potential targets for co-investment across emerging and developing economies, the release said.
