Waste management and sustainability go hand in hand, as mergers like the 2023 union of Waste Harmonics and Keter Environmental Services demonstrate. The midmarket companies combined under asset manager TPG last year to expand the services they offer their respective North American customer bases.
Keter manages waste and recycling programs for large property owners, like retail shopping centers, whereas Waste Harmonics services properties encompassing hundreds or thousands of locations. Bringing enhanced sustainability and reporting capabilities to both sets of customers is high on the agenda.
“Through the merger, what’s stood out is the two organizations have more similarities than differences,” says Francesco Malagisi, CFO of the merged business. “We’re not looking through the lens of how things have always been done at each organization, but instead what the best approach will be in every aspect of the business.”
In an interview with our Katie Kuehner-Hebert, Malagisi shared his thoughts on a CFO’s responsibilities during pre- and post-transaction as well as how customers can drive an organization’s vision and purpose around ESG and sustainability.
ESG and sustainability are critical focus areas for the waste management industry. How did your initiative develop?
We pride ourselves on having been ahead of the curve for many years when it comes to ESG. Our customers used to focus solely on cost and getting services at a more competitive price, which will always be an important consideration. But now, customers also want to know that as an organization and with our offerings, we’re doing right by the environment.
The partners and shareholders of our customers are holding them accountable, and therefore they’re holding us accountable. We embrace it wholeheartedly, and it’s very rewarding when you can match your vision and purpose regarding sustainability with that of your customers.
When discussing ESG in the waste and recycling sector, two crucial KPIs are diversion and efficiency. Diversion is a straightforward calculation to understand how much waste is being diverted from the landfill as a percentage of the waste created at the property. Efficiency is about optimizing waste pickup and other operations. It’s a big part of the value of our model. For example, we’re able to leverage monitoring technology on customers’ compactors and dumpsters to gauge fullness and streamline pickup schedules, which helps reduce carbon emissions in the long term.
We find that almost everybody wants to do the right thing when it comes to minimizing their impact on the environment. It’s important to set targets and then develop programs that allow you to reach them.
For those organizations that are late adopters of ESG strategies, what are the first steps they should take?
Start by having open and honest conversations with customers. Find out what’s important and what their goals are (whether publicly or internally stated). Starting from a baseline understanding helps foster a shared value proposition and lays a path for getting there within a set time.
Be sure to align ESG strategies with corporate goals and assess the risks and opportunities related to environmental impact, social responsibility and governance practices. Integrate the ESG considerations into financial planning, budgeting and reporting processes and align them with long-term financial goals. That way, you can evaluate projects on economic returns and potential ESG impacts.
Ultimately, you need to know how vested customers and your organization are in establishing the ESG framework. Then, put a proper plan together with added attention to continuous education and refinement to hold one another accountable. Transparent communication and ethical leadership build trust among stakeholders and ensure initiatives drive financial performance and environmental impact.
What advice do you have for CFOs navigating a merger?
I can’t think of a responsibility more critical than a CFO’s involvement in M&A. We directly evaluate the financial implications and support strategic oversight to help realize synergies, value creation and transformation.
Analyzing the financial health of both entities is critical. Throughout the M&A process, CFOs should assess risks and project potential synergies—key components that should be considered leading up to the close of a merger to determine financial feasibility and valuation.
Once the merger is executed, outline objectives for aligning financial systems, reporting processes and accounting practices. Establish a structure to manage consolidated cash flow and capital allocations. Engage in frequent planning and budgeting conversations with senior leadership to show financial transparency and ensure the company is charting a future desired state.
What are the other important responsibilities before and after a merger that require concentrated effort from the CFO?
The three “Ps”—people, process and product. Communicate consistently, transparently and often to the team through daily team huddles, weekly touchpoints, quarterly consultations or town-hall-style meetings. They understand there will be some change in any merger; be transparent and get the team excited simultaneously.
Ensure that processes are smooth and efficient by leveraging technology and automation where it makes sense. If an organization communicates often and honestly to its people and solidifies its processes, it will deliver a superior product to customers.
Don’t overlook the need to unify company cultures. The CFO plays a role in establishing a shared mission and vision. Internally, that means emphasizing the importance of human capital—the people—on both sides of the deal. Externally, it means meeting with customers and partners frequently to share progress and bring them on the journey toward growth and value creation.
