Conscious Capitalism in the News – June 10th
This issue:? Millennials are game changers when it comes to socially responsible investments, why rebranding Monsanto won’t protect Bayer, Greenwashing:? when companies are posers, and more.
Generally speaking, a traditional investment portfolio of 60% stocks and 40% bonds has a good historical track record and less risk. But this model assumes that the single goal is a financial return alone. Millennials want more than that. The largest generation in the world is demanding a socially responsible return as well, and it?s showing in the markets.
Instead of merely analyzing an investment by its performance and risk potential, Millennials are demanding a new menu of options that impact various environmental and social problems. This is resulting in the rise of socially responsible investment (SRI) opportunities.
What are SRIs?
Socially Responsible Investing is a strategy that aims to deliver competitive returns while trying to bring about environmental, social and governance improvements, and avoiding ventures that do harm. The degree of either investment or divestment in any specific category is up to the investor. For some, divesting from assault weapons is important, for others investing in water technology aligns with their beliefs.
The number of individual investors factoring sustainability issues into their investment decisions has increased. Asset managers are paying close attention to this demand. ?From Robo-advisors to 401(k)s, investments with references to SRI, ESG investing, sustainability, values-driven investing, corporate social responsibility, and sustainability are popping up everywhere.
According to Morgan Stanley’s Institute for Sustainable Investing 2017 Sustainable Signals report, Millennials:
- Purchased from a sustainable brand 2X more often than the total investor population.
- Were 3x more likely to have sought employment with a sustainably-minded company.
- Invested in companies targeting social/environmental goals 2x more often than the total individual investor population.
Based on my analysis of fund prospectuses …?I found 235 sustainable funds available to U.S. fund investors. – Jon Hale, Ph.D., CFA, Director Sustainbility Research, Morningstar
Both Wealthsimple and Swell Investing are bringing opportunity to the retail level, opening up socially responsible investment opportunities beyond traditional vehicles and retirement fund options. The myth that you have to compromise your beliefs or values in exchange for a good return is being refuted by reams of research concluding that socially responsible investing does not have a negative effect on performance.
The term sustainability is gaining influence in the corporate and financial world. But what does it actually mean? The concept of sustainability recognizes that economic, social and environmental responsibility aren?t isolated from each other but interrelated. Sustainability is a shared value and a collective responsibility. A creative way to envision corporate sustainability is to break it down into 6Ps which can be creatively toggled to generate value-added interdependencies.
- People – Building awareness, knowledge, skill and livelihoods.
- Process – Turning compliance and regulation into an opportunity and making value chains sustainable.
- Partnerships- Ensuring every member of the value chain shares the collective responsibility.
- Product ? Designing and building sustainable products and services over their lifecycle.
- Profit ? Innovating new business models to sustain growth responsibly and ethically.
- Planet ? Minimizing our environmental impact and reducing dependence on limited resources.
There is no Plan(et) B. Until someone figures that one out, we need to sustain Plan(et) A and design thinking can certainly help the cause.
The term ?greenwashing? came about in the 1980s to describe the behavour of corporations who try to portray themselves as environmentally responsible, but aren?t. There are countless examples of companies who suggest that they have the environment at the heart of their values after making one small environmental move, yet a deeper look at their business practices shows that 90% of their moves as a whole are environmentally destructive.
How can we really know whether the companies we buy in to are making real, sustainable change, or whether they are simply riding the latest conscious trend while continuing to harm the planet?
Bayer became Monsanto’s sole shareholder but is ditching its tarnished name. Tarnished or not, Monsanto sold for slick $66 billion. Though Bayer is involved in many of the same activities, it has so far managed to escape the negative public perception in Europe that its American counterpart has.
“Suffice to say that Bayer enjoys an excellent reputation and appeal worldwide. We must take advantage of that.” – Werner Baumann, CEO Bayer
However, Katherine Paul, associate director of the Organic Consumers Organization that organizes the Millions Against Monsanto movement, says the rebranding effort will not cause the anti-GMO campaigners to lose focus.
We can easily move from our ‘Millions against Monsanto’ campaign to a ‘Billions against Bayer’ campaign. – Katherine Paul, Millions Against Monsanto.
- A toxic mix – Widely used around the world but highly toxic for people and planet.
- Opaque Lobby spending – In the EU and the US, both Bayer and Monsanto have to declare their lobby spending in so-called transparency registers. But these figures only cover direct lobbying in the capitals. Many other costs lurk beneath the surface.
- Lobby network bends safety standards – Agribusiness corporations like Monsanto and Bayer have built a vast network of influencers to bend EU laws and safety standards in their favor.
- A food system under corporate control – Our current model of farming and food consumption is destroying the planet and hurting people.
- The package deal: patented, weedkiller-addicted GM crops – A substantial part of Bayer?s and Monsanto?s business comes from genetically-modified (GM) seeds that have been engineered to tolerate the companies? herbicides.
- The BaySanto lobby tool box – Both Monsanto and Bayer use a wide range of lobby strategies to rig EU pesticide regulation in their favour.