Conscious Capitalism in The News – November 2018
Conscious Capitalism in the News 😕 Conscious capitalism = quality for investors, Zero waste business mindset = profits, Banks can’t afford to ignore ESG, The dilemma of sustainable luxury brands.
Attaining true zero waste is extremely difficult. But as the trend towards sustainability expands, businesses that at least aim for zero waste can create noticeable results towards both profit and sustainability. Some key steps:
Create a Benchmark?
Know what waste or materials you are generating?and quantify that over time – weeks, months, years – to?nail down the source of your excess.
Review Your Operations
Ask yourself why you are creating this waste. Most likely it’s from procuring goods, or from operations. A reduction, if possible, will decrease the cost of disposal. If you can’t reduce, perhaps you can repurpose and create additional products from the waste that can be sold at a profit.
Reframe Your Thinking
Remember the phrase ?one man?s trash is another man?s treasure?? What packaging can be repurposed? What excess food products can be donated for tax benefits?
Explore Your Program
Research your current disposal program. What can you possibly divert from a landfill and move towards? recycling or composting which can often be cheaper than garbage pick up.
Think Along?The Triple Bottom Line
- People ? Divert waste materials to charitable organizations in need (e.g. food to the food insecure).
- Planet ? Divert from landfills into reusable commodity streams.
- Profits ? Reduce over-purchasing, increasing efficiency, capturing value in the waste stream, etc
Adopting a zero waste mentality will require some effort towards commitment, discipline and endurance, but those who persevere can walk away with pride and profit.
Geneva based luxury jeweler Chopard claims that its gold is 100% ethical. Its website?s manifesto states that ?Chopard defines ?ethical gold? as gold acquired from responsible sources, verified as having met international best practice environmental and social standards.?
But even though Chopard insists that it is committed to the UN?s SDGs, Human Rights Watch, a human rights advocacy NGO, ranks Chopard?s sustainability programs as ?weak.? Why? Because Chopard won?t prove its claims. Chopard refrains from being candid about the specifics of its suppliers because it feels it would risk its business operations. So, there simply isn?t information on its suppliers to verify its sustainability programs.
Similarly, LUC8K, a Swiss company, founded on the principle of producing sustainable luxury leather bags and accessories, also claims to strive towards the UN?s SDGs. It says it sources the majority of its leather in the south of France, an area renowned for producing the best quality leather in the most sustainable conditions and with the proper certifications. But just like Chopard, its claims cannot be confirmed because the company does not want to reveal its supply chain.
…we try not to leave a bad impact on the environment. (Sustainability) is not a marketing plug for us. – Karen-Maria Olivo, founder of LUC8K
Montblanc of Florence produces high quality leather goods, writing instruments and watches. It also sells a few exotic hides that are sourced for custom orders. While a company representative claims that all leather and exotics come from sustainable sources, this information cannot be verified.
Luxury brands are afraid to be transparent about their supply chains and manufacturing processes because they don?t want to reveal them to ?competitors. Yet transparency is the only thing that can really prove a company isn?t greenwashing. Perhaps a public verification system that doesn?t expose a brand?s suppliers and business operations would solve this problem. In the meantime, it?s completely up to a buyer?s discretion.
1) Money is Flowing into the ESG Sector
According to the Global Sustainable Investment Alliance, $22.9 Trillion is invested in some form of sustainability. New indexes to track ESG performance are appearing on the market consistently, drawing in a new breed of investors. The flow of cash of institutional investors show that responsible investing has gone mainstream.
2) With Investor Interest On The Rise, Small Businesses Will Emerge
Sustainability gives rise to new business and new business practices. Whenever there is investment interest in a specific sector, a group of start ups will look for funding. In addition, corporations are developing new policies for their own investment practices.
3) Divestment And A Shift In The Economy
Investment managers need to pay attention to divesting certain industries based upon location. Where a community bank in West Virginia may incur customer backlash with a strict ESG funding policy on coal, a bank in Berkeley, California would suffer public relations problems if funding anything near coal. As sustainable investment grows, this could have a profound effect on the economy in specific regions of the country.
4) The Next Generation Of Banking Leadership
The banking industry is in a transition stage where technology has become paramount. It must have an innovative young workforce. New graduates want to know that their company cares about the environment and the community. A bank that both endorses ESG for the operation of the bank itself, as well as a focus on funding ESG initiatives and start ups can help attract some of the best young talent.
ValueDach interviews Steven Wood of Greenwood Investing at the?International Value Investing Conference 2018 which took place in?Luxembourg from October 23 to 24. Wood explains how approaching quality from a conscious capitalism standpoint gives Greenwood leverage over its competitors.
Wood states that, although it may seem counter intuitive, the best performing companies over time may have lower profit margins than their peers because they:
- pay their best performing employers more
- are willing to spend more on R & D
- treat their suppliers well
- create customer loyalty by starting with what the customer wants without trying to profit maximize
Low profit margins are often indicative of a company that is actually investing in itself for the long term. And those investments seed significantly faster growth. ?Check it out here: