This round of Conscious Capitalism In The News: Wells Fargo takes a beating, impact investing in microloans to low-income female entrepreneurs, the story of Backstage Capital: from a dream to a multi-million dollar seed investment fund for female, LGBTQ, and minority entrepreneurs, global investment giants discuss ESG goals and more…
The Federal Reserve said it won’t let Wells Fargo grow any larger than its total asset size as of the end of 2017 until it improves governance and controls. Wells Fargo ended 2017 with $1.95 trillion in assets. From opening millions of customer accounts Wells Fargo without authorization to charging hundreds of thousands of borrowers for unneeded guaranteed auto protection or collateral protection insurance for their automobiles, the banking giant has been in the news consistently with reports of consumer abuses and compliance breakdowns. Wells Fargo will be able to continue current activities including accepting customer deposits or making consumer loans.
“We cannot tolerate pervasive and persistent misconduct at any bank and the consumers harmed by Wells Fargo expect that robust and comprehensive reforms will be put in place to make certain that the abuses do not occur again.” Chair Janet L. Yellen
Wells Fargo’s shares dropped after the February 2nd announcement.
Environmental, social and governance (ESG) concerns can make or break a company. Neglect them, and it can be the downfall of your brand. Remember the BP Gulf oil spill? It still plagues the company’s reputation eight years later. On the flipside, ESG issues can actually help define your brand and company values. Patagonia’s success stems largely from its sustainability practices and the values it embodies.
Integrating ESG mitigation and management can improve customer loyalty, create operational efficiencies, lower operational risks and costs, identify potential new sources of revenues, and allow for new market entry, in addition to retaining and motivating employees.
By the end 2016, more than 1,500 socially conscious investors and managers, representing about $60 trillion in assets under management, signed onto the U.N.-backed Principles for Responsible Investment (PRI).
450 investors with $30 trillion in assets under management convened at the United Nations on Wednesday, January 31st, to discuss the next steps investors must take during the eighth Investor Summit on Climate Risk. Some takeaways:
“We just try to integrate [Environmental, Social and Governance] ESG into our portfolio management across all the asset classes, and also globally.” Hiro Mizuno, executive managing director and CIO of Japan’s $1.5 trillion Government Pension Investment Fund, (GPIF)
“Every asset class and every investment team has a carbon budget, and they have to live within that in the same way that they have to live within a risk budget.” Michael Sabia, CEO, of the $250 billion Caisse de dépôt et placement du Québec (CDPQ)
“I recognize it’s a complex process and won’t be easy. But crunching the numbers and making a plan consistent with our fiduciary duty is something we believe we must do, because moving toward divestment (from fossil fuels,) in some respects, is the future, because the stakes are so enormous.” – Scott Stringer, comptroller for the city of New York and its $193 billion in assets under management.
“If you look at the people who spoke today, whether it’s Goldman Sachs or Japan’s pension fund, it’s people who manage trillions, not billions of dollars. And they’re saying they’re acting on climate risk. That’s not [joining hands and singing] kumbaya. That’s real dollars.” – Mindy Lubber, CEO, and president of Ceres.
Grameen America has already provided $800 million in microloans to low-income women in the US who want to start a business. The nonprofit provides loans, savings programs, and financial education to its members. They even help borrowers build a credit score. Members attend weekly meetings led by a financial coach for support. If the women pay back their loans in six months, they qualify for another loan. Of the 97,000 entrepreneurs who have taken out loans, most of the businesses range from beauty salons to cleaning and food services.
In the past, Grameen America has been mostly funded by traditional philanthropy from foundations, commercial lenders, charities, and individuals. However, the non-profit has just announced that it closed its first Social Business Fund, an $11 million impact investing fund aimed at providing additional money to entrepreneurs who have already started working with Grameen and expanding to more regions.
“This fund will help us move into new geographies, help our existing members build bigger businesses and help us become really national in scope,” says CEO Andrea Jung.
Arlan Hamilton had spent over a year chasing down potential Silicon Valley investors to fulfill her dream: starting a venture-capital fund that invests in female, LGBTQ, and minority entrepreneurs. Sleeping on couches and running out of funds, she refused to give up. Finally, in September 2015, she received that first break. A text message from Susan Kimberlin, an angel investor and startup advisor: “I’m in,” it read. Now Arlan is the founder and managing partner of Backstage Capital, a multi-million dollar seed investment fund that backs high-potential, underrepresented startup founders.
The case for investing in diverse founders and diverse markets is more about doing everything you possibly can to not miss unicorns and decacorns and polyamorous butterflies (I just coined that, thank you) in underserved, untapped places. – Arlan Hamilton
Oceanic ‘dead zones’ are areas where climate change, industrial pollution, and agricultural runoff have caused depleted oxygen levels to the point where nothing lives. These areas surround the U.S., developed Europe, Britain, and Japan, and have recently been discovered in the tropics. The common link is capitalism. You’d think the very term ‘dead zones’ would give pause to those creating them.
What relationship with the world explains treating it as a garbage dump?
What then is to be done regarding the colloquialism ‘don’t shit where you eat’ when the world is home?
A brave peek inside the political, economic, and cultural subtexts of Western modernity.