Put Your Money Where Your Values Are
50% of Americans say that a company’s stand on social issues positively impacts their likelihood to purchase a product from that company (Eco Pulse 2018).
Sustainability Win of the Week
We’ve often said that “we all bring ourselves to work,” meaning that the expectations we all have of the companies we buy from translate to expectations of the companies we work for. A couple of weeks ago we highlighted WeSpire’s annual employee engagement survey results, which demonstrated, yet again, that employees are hungry to see their companies taking steps to protect people and the planet, and they want to be engaged in those efforts. Which gets us to the ultimate way a company can send a positive signal to its employees and engage employees in action on the environment: via their 401k programs. When a company offers its employees retirement funds to invest in – funds which have all been intentionally vetted for high marks on environmental, social and governance (ESG) factors – it sends a clear message to employees that the company is putting its money where its values are … and it gives employees the opportunity to do the same. So, this seems like a no-brainer. ESG funds are out there and plentiful – so why isn’t every company that is offering itself up to the market as a “sustainable brand” following suit? (Here at Shelton Group, for instance, we offer the Natixis Sustainable Future Funds in our 401k.) It seems like there’s a long-standing belief that investing in socially responsible companies means trading off returns – kind of like the long-held, largely false belief that if I buy a green cleaning product I have to accept that it won’t clean as well. Well, it is indeed 2019, not 2008, and things have changed. You can actually do the right thing for the environment without sacrificing performance! In fact, as we’ll be revealing in an upcoming report laser-focused on feminine care products, many Americans will tell you often the more sustainable option performs BETTER than the conventional product (this is certainly true in a variety of sectors – EVs are way zippier and more responsive than cars with combustion engines, LEDs offer incandescent-level color quality AND last way longer, etc.). So, is the same true with ESG funds? The short answer is yes:
- Research by Ioannis Ioannou of the London Business School and George Serafeim of Harvard Business School demonstrates that sustainability can be a strategy that “is significantly and positively associated with both return on capital and market valuation multiples.”
- An Investors’ Corner article from BNP Paribas asks the performance question and draws on an Oxford University–Arabesque Asset Management report to find out. Based on a meta-study of more than 200 different sources, it was determined that sustainability practices do indeed matter for performance. Ninety percent of the sources concluded that sound sustainability standards lower the cost of capital of companies; 88% determined that solid ESG practices result in improved operations; and 80% saw a positive influence on share price performance thanks to good sustainability practices.
And if you want to be sure that ESG funds really are what they say they are – so you’re not up against greenwashing in the financial sector – look to the Global Reporting Initiative (co-founded by Ceres and the Tellus Institute), which is the gold standard for corporate reporting of sustainability efforts. Ceres regards sustainability monitoring as increasingly an “all-hands-on-deck effort by all economic sectors, all governments, and all segments of society.” And a recent article in Forbes by Victoria Mills and Austin Reagan of EDF+Business (full disclosure: a Shelton Group client) addresses this question of metrics as well – targeting corporate sustainability rankings and especially the issue of corporate public policy advocacy. Many companies target their own operational and product emissions – but that is not enough; lobbying, political transparency and public engagement are also crucial metrics for determining top CSR rankings beyond the company level, in society at large. In short, put your money where your values are – and give your employees the opportunity to do the same. Investing in ESG funds is an excellent start, which shows your commitment to sustainability – and your confidence in sustainable business at large.
News of the Week
World Water Day is every day: how businesses can step up and save – Environmental Leader
World Water Day was this past Friday (March 22), and this article discusses how businesses can step up every day in support of water conservation. The main message: responsible water use is good for the environment and good for business – and it doesn’t take a huge effort to make a difference. Consider water savings by streamlining the manufacturing process and relying more on recycled materials. And get employees involved in your mission!
Profitability or sustainability? It doesn’t have to be a choice – Supply & Demand Chain Executive
On theme with this week’s blog post, this piece from SDC Executive discusses how sustainability and profitability are not mutually exclusive but rather two sides of the same coin. In particular, the article homes in on supply chain. Our favorite insight: “several low-hanging fruits exist that can make significant gains in making the supply chain greener.” Go after the easy wins first, then use the momentum for greater yet more complicated tasks.
It's a Period of Change
“Disposable” and “single-use” are becoming bad words. What customers really want is reusability, which is pulling ahead as the next big market trend. We’ve homed in on one particular industry and product type where we expect the biggest upset: consumer packaged goods and feminine hygiene products. Women are embracing reusable products and it’s shaking up the industry. And chances are, it’ll spread to YOUR industries and products.