This month’s Conscious Capitalism in the News:? We are all impact investors, find out why, Japan’s Oji Group’s huge environmental platform, Conscious Capitalism is the new Capitalism 2.0, Corporate Social Responsibility ramps up on the Planet agenda, and more…
Most paper companies consume trees for their products. Oji grows more trees than it uses. The 3rd largest paper company in the world has a huge environmental platform, partially due to recent changes in its focus.
The company is the biggest private forest owner in Japan with a total of 190,000 hectares of forest ? roughly the size of Osaka Prefecture. – Yoshimasa Tanaka, Sustainable Management Office General Manager, Oji Group.
Oji has an additional 260,000 hectares of forests in other countries. 200,000 of them certified by the Forest Stewardship Council.
Oji understands that they must create the resources they use, else they will end up without them. But they have been busy in other areas, too.
Image Source: Japan Times
Oji has also been offering the Oji Forest Nature School, a hands-on environmental education program for school children in five locations in Japan since 2004. – Kazu Ikeda, Public Relations and Investor Relations Department General Manager.
Through this program, children learn, almost ?instinctively, that adequate maintenance helps preserve biodiversity in the forest.
Recently, Oji has even taken another step into the future by looking into the development of sustainable plastic substitutes. Oji is manufacturing various base paper for food products such as beverages, yogurt and ice cream, in addition to oil resistant packaging used by fast food restaurants.
Kansas City?s urban core, having not yet recovered from the subprime mortgage crisis and decades of residents? flights to the suburbs, has become overrun with vacant structures. Not only do these abandoned properties decrease property values, they also provide refuge for increasing criminal activities, and depress the spirits of those living near them.
But a new and innovative initiative to help reduce the number of vacant houses and improve the living conditions of Kansas City?s poorer citizens is helping by establishing a loan pool of almost $500,000 to provide short-term, market-rate loans to smaller contractors to rehab abandoned homes.
KCSIP, the Kansas City Social Investment Pool, is a partnership with Legal Aid of Western Missouri, which provides legal services to low-income people who cannot afford attorneys, and AltCap, a community development financial institution.
The fewer than 10 individuals who provided the seed money by investing in KCSIP understand the risk. They know that they might not receive a monetary return, or even get back their original investment.
But their motivation to invest was not strictly financial. They are seeking to make their returns by benefitting society at large first, and if they make money, even better. ?Social impact investing is a growing trend that seeks to resolve social issues that government and traditional financial markets cannot seem to service.
Like a pebble dropped in a pond, this innovative loan pool will create ripples that spread along the streets and neighborhoods of the central city, providing safe and secure housing for more low-income residents and helping improve the lives of the city?s residents. – Jerry W. Venters, President of the Board of Trustees of Legal Aid of Western Missouri.
According to the UN, $23 trillion of the global $87 trillion financial assets under management (excluding Latin America and Africa) is already aligned to supporting the UN?s Sustainable Development Goals (SDGs).
India, the site of GSG?s Impact Summit in October 2018, already has multiple impact enterprises with greater than $1 billion revenues or valuation. These enterprises are replicable elsewhere in India and across global markets looking for impact. Here?s how the impact continuum brings us closer to Conscious Capitalism, or Capitalism 2.0.
Act to Avoid Harm – Responsible investments act to avoid harm to their stakeholders, by, for example, decreasing their carbon footprint or paying appropriate wages. Managing environmental, social and governance (ESG) risks are the biggest part of this component.
Benefiting Stakeholders – Sustainable investments that benefit stakeholders, for example, by proactively upskilling their employees, or selling products that support good health or educational outcomes, are next in the impact continuum.
Catalyse Solutions – Impact investments are further along the impact continuum: they can also use their capabilities to catalyse solutions to pressing social or environmental problems — for example, by enabling an otherwise underserved population to achieve good health or educational outcomes, financial inclusion, or hiring and skilling formerly unemployed individuals.
We are already using humanity?s greatest invention – money – to heal the world?s social and environmental ills. We can invest in a future where no one lives in poverty and the planet thrives. – Amit Bhatia CEO, The Global Steering Group for Impact Investment (GSG)
Where we shop, how we spend, where we save, where we invest, and even who we pay our debts to, all have a huge amount of power. The founder of WellWallet, Sofia Rossato, wants to show how you can improve your finances, regardless of the state they are in now, while having a positive impact in your community and the environment. The WellWallet philosophy is to transform the money economy into a force for good, and make money management fun and accessible for everyone.
What is the WellWallet app and what makes it unique?
The WellWallet app is a friendly automated money assistant and financial tracker ?with a heart. Like other personal financial management apps, the WellWallet app will give you hints for growing your money. It?s uniqueness lies in the way it provides personalized and actionable tips that show you how to grow your money with positive impact. Free yourself from debt, save, invest, and learn how to use your money as a force for good.
For many people, money can be at the same time boring and terrifying. What if we could make it fun and approachable?
Join Sofia in this transformative interview as she shares what inspired her to createWellWallet. She discusses the WellWallet investment philosophy that people from all income levels can follow, and explains how you can use technology to both grow your money and create the world you want to live in.?
If you are interested in both improving your finances and the world around you, you don?t want to miss this podcast.
Lately we are seeing that, as the impact of climate change is increasingly felt, the environmental part of CSR -?planet –?is becoming increasingly important. Some companies have begun to redefine their CSR policies to prioritize the environmental, which until just a few years ago was only considered a ?nice to have,? giving annual reports a feel-good factor. For example:
And this is a good thing because we truly are running out of time.
We need to move forward from the irresponsible idea of climate change as something that might happen in the distant future to understanding the gravity of the situation and the threat it poses. We face an emergency that requires all of us to act now, before it really is too late. – Enrique Dans, Professor of Information Systems, IE Business School in Madrid.
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.
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.
Conscious Capitalism In The News:? Invest in water – win the long game, How ESG can protect your portfolio, Bud rebrands to Green Beer, A warning to all businesses:? Be sustainable or risk your bottom line, and more…
Water-related ETFs are in an advantageous position due to some pretty serious situations.
For example, PowerShares Water Resources ETF (PHO), First Trust ISE Water Index Fund (FIW) and Tortoise Water Fund (TBLU) hold?shares in U.S. water utilities, such as American Water Works, infrastructure companies like Aegion Corporation?and technology companies like Xylem, a supplier of energy-saving pumps and controls for hot water systems.
All 3 water-related ETFs are up around 15% since last year.
…there’s really not a much more essential asset than water…people are really starting to realize we have a global water problem on our hands -?Matt Weglarz, Portfolio Manager at Tortoise Index Solutions.
Global water demand is expected to grow by more than 50 percent over the next 30 years. In 2015, the EPA estimated that we need $472.6 billion to fix America’s public water infrastructure system alone.
Flint, Michigan, is still waiting…
There is?opportunity for investors to capitalize on clean water infrastructure and technology over the long term because of the need to upgrade and maintain water systems across the U.S.
The Swell Clean Water portfolio is a managed portfolio of water-focused companies which is up 11% over the past 12 months.
Whether it’s through news about water scarcity or news about the demand for water or need around improving our water infrastructure, those are all reasons that you would want to be in a clean water portfolio of companies that are addressing any one of those areas. -? Dave Fanger, CEO of Swell Investing.
Anheuser-Busch has officially promised that the $400 million worth of electricity it uses each year will be 100% renewable by 2025. It has also vowed to follow through on sustainability goals which include plans to:
Repackage beverages in majority-recycled content
Improve water efficiency
Work directly with farmers
Reduce carbon emissions by 25%.
In celebration of its new vision, starting on Earth Day, it has labeled all of its cans and bottles of Bud with a new ?100% Renewable Electricity? symbol to make consumers aware of its new goals.
This labeling strategy builds awareness, sparks conversation about what exactly it means to be sourcing clean energy, and offers a gateway to the bigger discussion that consumers?particularly millennials?increasingly expect. The challenge is for the company to maintain transparency everywhere, even with more challenging questions.?- Christen Graham, Social Impact Executive
Anheuser-Busch CEO Carlos Brito has proclaimed that ?Budweiser is going to be carrying the flag for renewable energy around the world.? However, when a company does not follow through with its corporate social responsibility promises, it amounts to greenwashing.
Will Bud follows through with its promises? In fact, it may not have a choice.
Whether beer brewers rebrand as green and fly ?the flag for renewable energy or not,? they are going to have to not only rethink their sustainability strategies, but actually carry them out in order to survive. Issues of water scarcity and water quality currently pose particularly serious threats to the survival of food and beverage industries around the world.
Much like the shift we went through when turning our backs on smoking and littering, we?re clearly in the middle of a massive cultural shift when it comes to sustainability. Just as we find it abhorrent to throw litter out of a car window, it is now becoming unacceptable to buy products from companies deemed to be mistreating the planet.
What this means for companies is that if they don?t start integrating sustainability and corporate social responsibility into their business model, products, and brand, they are definitely going to feel it in their bottom line.
45% of Americans want to be seen as someone who buys eco-friendly products.
Over 50% of Americans don?t believe a product is green if they don?t believe the company is green.
Over 50% of Americans can think of a time when they?ve either purchased or not purchased a product because of the environmental reputation of the manufacturer.
When it comes to Millennials, these trends are even stronger:
90% say they?ll buy from a brand if they trust that company?s social and environmental practices.
95% say they?ll recommend the products to their friends and family if they trust a company?s social and environmental practices.
We?ve come a long way. Being eco-friendly is no longer considered a fringe activity limited to activists and early adopters. Joining the dialogue and aligning your brand with deeply held beliefs is the marketing of the future.
Business must be part of the solution…Sustainable, equitable growth is the only acceptable business model. – Unilever
Bottom line:? Don?t smoke, don?t litter, and be a sustainable brand ? or risk losing your marketplace advantage.
In this interview, Martin Kremenstein, head of retirement and ETF solutions at Nuveen, defines ESG (Environmental, Social and Governance) and explains how ESG metrics serve both as an indicator of quality, and can be used as a risk management tool. Some takeaways:
According to research from MSCI, companies ranking in the lowest 20% in ESG ratings have been twice as likely to suffer a catastrophic loss (over 95% cumulative loss) within three years.
MSCI downgraded Equifax to the lowest ESG rating on cybersecurity concerns one year before?the data breach was announced.
Facebook was excluded from Nuveen’s NuShares ESG Large-Cap Growth ETF when the ETF launched in December 2016 because Facebook scored relatively poorly over data privacy concerns compared to other tech companies.
Before the Deepwater Horizon incident, BP had actually been downgraded and removed from major ESG indices over concerns about its outsourcing of maintenance of offshore oil wells, which was directly related to the accident itself.
By actually having this framework in place, you are really putting in place a method for trying to avoid tail risk from companies that are badly run, and may end up having serious, serious scandals in the press. -?Martin Kremenstein, Nuveen.
South Australia, the Australian Capital Territory, Tasmania, and the Northern Territory, have state-wide bans on single-use plastic bags. Queensland is set to follow suit in July 2018. Major Australian supermarkets Coles and Woolworths have announced they will phase out single-use plastic bags by mid-2018.