01
Sourcing
Screening for sector-level material risks and finding targets where sustainability performance is a genuine differentiator rather than a compliance line item.
NYU Stern EMBA • Course Project
Pricing sustainability risk in a private-markets deal
Sustainability Value Creation in Private Markets, taught by Angela Jhanji
The final exam simulated a live investment committee. Four teams each took one workstream of a full diligence process on a single target — a global beauty company. Ours was risk assessment.
We had to identify and prioritise material risks, assign severity, propose mitigations, and then defend the analysis under questioning from the rest of the class acting as the IC.
My role
- - Led the risk assessment workstream.
- - Built the materiality matrix and risk register.
- - Presented and defended it to the IC.
Team of nine, four workstreams, August 2026.
Sustainability across the investment lifecycle
The premise of the course is that sustainability is not a reporting exercise bolted onto a deal. It shows up differently at each stage of ownership, and an investor who treats it as a compliance obligation will systematically misprice both the risk and the opportunity.
02
Diligence
Materiality assessment, red-flag identification, and quantifying the exposure a seller has not priced into the asset.
03
Ownership
Building the evidence base — baselines, KPIs, governance — while executing the value creation plan across the hold period.
04
Exit
Converting that evidence into an equity story a buyer will pay for. It cannot be retrofitted in the final months before a sale.
Upside value creation
Sustainable product innovation, market expansion into underserved segments, brand differentiation, and employee productivity — levers that grow the top line or the exit multiple.
Downside value protection
Supply-shock resilience, reduced regulatory and reputational exposure, and cheaper capital through sustainability-linked financing — levers that defend the multiple.
Frameworks applied
SASB / ISSBESRS double materialityTCFD & TNFDILPA ESG Assessment FrameworkSBTiNYU Stern ROSIGRESB & LEEDEU CSRD & OmnibusUK SRS
How we built the assessment
We triangulated three lenses, deliberately kept in tension. Where they disagreed turned out to be the most interesting part of the analysis.
The outside-in lens
SASB's Household & Personal Products standard, which tells you what a generalist investor would consider material for the sector.
The company's own lens
Its first ESRS-aligned double materiality assessment — including, crucially, what it chose to exclude and why.
The mandate lens
Our hypothetical fund's stated principles. Materiality is a function of the holder as much as the asset.
One deliberate methodological choice
We assessed on a gross basis, before mitigation — a departure from the company's own net-basis assessment. As a prospective owner you need visibility of the underlying exposure, not the residual after controls you have not yet independently verified.
The risk register
Eight material topics, assessed gross of mitigation. Three carried a High rating — and one of those was not an environmental risk at all.
A
Packaging lifecycle & circularity
High
Post-consumer recycled content sat at 10% against peers near 71% recyclable, refillable or reusable. EU packaging rules make the cost of inaction rise every year.
B
Product environmental, health & safety
High
Substances of very high concern were excluded from the company's own materiality shortlist, and revenue exposure was unquantified — in a business where fragrance is roughly 71% of revenues.
C
Water management
Moderate
Withdrawals down 16% against a 25%-by-2030 target — behind pace, with exposure concentrated in water-stressed basins.
D
Palm oil & raw-material sourcing
Moderate
100% certified — but through the weakest certification tiers, which evidence administrative rather than physical traceability under EU deforestation rules.
E
Human rights & forced labour
Moderate-High
Genuinely strong Tier 1 controls, but a fifth of supplier spend lacked a recent third-party assessment and visibility beyond Tier 1 was limited.
F
Animal welfare & testing
Moderate
Deemed non-material by the company — but named explicitly in our fund's mandate. Rated on our lens, not theirs.
G
Leverage & licence concentration
High
The binding constraint on funding every other mitigation. Leverage rose despite significant debt paydown, because earnings fell faster.
H
Consumer data privacy
Moderate
Growing direct-to-consumer and loyalty data across 120+ markets, with risk potentially understated as AI-driven personalisation expands collection.
Basis: SASB Household & Personal Products; the company's FY25 double materiality assessment and sustainability report; its FY25 modern slavery statement; and third-party credit research. All figures from public disclosure.
Where we disagreed with the company
The most defensible parts of our analysis came from reading the methodology notes rather than the headline pages. None of the following is hidden — it is all disclosed. But it changes what the disclosure means.
- Substances of very high concern were excluded from the materiality shortlist.
- Animal welfare was concluded to be non-material — while sitting explicitly in our fund's mandate.
- The assessment ran without direct external stakeholder consultation, using internal functions as proxies.
- The company stated plainly that it could not quantify the financial effects of its material risks.
That gap between what a disclosure says and what it means is exactly what a deal team exists to close.
What we recommended
Recommendation to the investment committee
Pass at current terms. Re-engage on confirmatory diligence once the licence transition and permanent leadership are resolved — two of the largest uncertainties resolve on a known timetable, and waiting preserves the opportunity at a materially better-informed entry point.
We paired that with prioritised value creation levers, chosen because each addressed a risk already on the register and built on capability the company had already demonstrated.
Scale recycled content and refill formats
Packaging circularity
Reduces virgin resin exposure and regulatory fees while supporting prestige pricing. A demonstrated track record on packaging weight de-risked delivery, and an existing refill format proved the concept commercially.
Get ahead of ingredient regulation
Sustainable materials & reformulation
Protects revenue against tightening chemicals rules and supports premium positioning — but R&D-intensive, with multi-year cycles that require board-level commitment.
The enabler
Sustainability-linked financing
With credit under pressure, this was the one intervention that pays back through the income statement rather than competing for capital expenditure.
What I take forward
Tap through the lessons that outlasted the exam.
Lesson 1 of 5
Materiality is investor-specific, not universal
The same company, assessed against two different mandates, produces two different matrices. Treating a materiality assessment as an objective output of the company is the most common analytical mistake.
Disclaimer
This page describes an academic exercise completed as coursework. The analysis was prepared by students using publicly available information, is presented for educational purposes only, and does not constitute investment advice, a recommendation, or a statement of fact about any company. Views are my own and do not represent those of New York University, the course instructor, or any company referenced.