Being a consumer puts you in a position of power. Each purchase you make throughout the day is, in effect, a vote for what you deem the best. When voting with your dollar, you are supporting a business, whether good or bad. A conscientious consumer thinks about the social and environmental aspects of any product or service before they choose to use it.?A wise consumer supports businesses that are doing more than just making a profit. This takes a bit more thought than pulling into Walmart or a few clicks on Amazon, but it’s well worth your time. Here are 6 reasons why you should support local business.
A local business owner is more likely to remember you and the products or services you purchase on a regular basis. This means that you get more personalized service. He or she is also more likely to have direct contact with all employees and a thorough knowledge of all products. Should any problems arise, you won’t have to stay on hold on some 800 number waiting for a faceless name to listen to your concerns.
2 – Increased Employment
Local and small businesses employ over 50% of the private sector workforce. Since the end of the Recession, small businesses are responsible 66% of all net jobs created. Local and small businesses are also more likely to hire locally increasing the employment base in your community. Keeping workers local decreases commutes and the environmental hazards that go with them.
3 – Improved Local Economy
Local businesses recirculate a far greater percentage of revenue locally compared to national chains or franchises. This is referred to as the “multiplier effect.” An average of 48% of the revenue from local businesses is recirculated into the local economy compared to only 14% from national chains.? Put simply, local businesses are more likely to purchase from other local businesses and use other local services. When you shop locally, you are actually investing in your community.
4 – Better, Healthier Products?
A marketplace of small businesses breeds competition. You are more likely to be able to acquire better quality products and services at local businesses. Local businesses have an element of transparency that faceless corporations don’t which holds them accountable to the quality of their products or services. In addition, purchasing from local farmers gives you access to healthier foods without the mass chemical spraying and preservatives required of corporate chains that have to mass produce and transport their produce over a long range.?Buying fresh, local and traceable foods is not only being a responsible consumer, but a healthy one.
5 – Property Value and Quality of Life
Local businesses give your community character. The uniqueness of a variety of local businesses is far superior to the bland monotony of ubiquitous national chains littering a cityscape. Because the businesses in your community make up a large part of its character, they also play a large part in both quality of life and property values. By supporting your community’s unique character rather than giving your money to national chains, you help to preserve its value.
6 – Socially and Environmentally Conscious Businesses
Local businesses are far more likely to be socially and environmentally conscious than big corps, especially when it comes to food. To begin with, local businesses reduce the carbon miles required from transport and may use local information to choose between suppliers. Local clothing stores are far less likely to purchase from mass fast fashion overseas suppliers. Due to consumer demand, small farm-to-table restaurants, regional banks, and small businesses are turning greener every day. In addition, because local businesses are invested in their community, they tend to take responsibility for their actions beyond simply bringing in revenue.
There are always knock-on effects to every product or service that you buy. Those effects begin with where you spend your dollar and what you spend your dollar on. While it may not seem evident on the surface, if you take a peak under the lid, you’ll understand both the direct and indirect impacts that each of your purchases has. Knowing where a product comes from is crucial to shopping sustainably. If there is a local option, choose it. Shop in season and don?t buy fruit that has more flyer miles than you do. Ask local shops where they buy their supplies from when it is not obvious.
When you buy products that are produced locally and sold by local businesses, there is a positive effect on the local economy. By contrast, when you buy food and clothing that is shipped in from thousands of miles away by a national retail chain, more often than not it is produced by workers who are exploited in a factory that has no environmental policy, and sold by a corporation that is not acting in a sustainable manner. This not only has a negative effect on local economies, but also on the world at large. Every purchase counts. Every purchase has an impact, whether we like or not. As the world is simply a collection of individuals, it’s up to each individual to make sure that their dollar 1) does no harm, 2) makes their community, and the world, a better place.
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.
A Radically Practical Approach to Sustainable Investing
Cornerstone Capital Group does not distinguish between ?impact investing,? ?ESG investing,? and ?sustainable investing.? They believe these terms reflect the same motivations and strategies – a mindful method of investing which is ?radically practical.??While environmental, social, and governance (ESG) practices generally describe the actions investors and companies take to achieve progress towards sustainability, Cornerstone Capital sees these practices as a critical discipline.
ESG as a discipline
Cornerstone Capital is a registered investment advisor founded in 2013. Cornerstone?s CEO, Erika Karp, feels that she came to sustainability quite organically. In Karp’s over 25 years experience on Wall Street, she has observed that systematically analyzing the most important environmental, social, and governance factors leads to a more predictive insight into issues which have been outside of traditional financial metrics that affect companies.
For example, a company might struggle with reputational issues around food safety incidents, or corruption within a company?s supply chain. As an investor, having access to this information makes you a better investor. Sector by sector, company by company, environmental, social, and governance indicators are absolutely material to the financial outcomes. Water scarcity affects a beverage company and their operations. Carbon prices and emissions affect shipping and airline companies.
ESG issues need to be part of the mosaic that an investment decision relies upon. The idea of sustainable and impact investing should be viewed outside of the ideological, politicized, and moralistic, and seen instead from a perspective of enhanced analytics, pragmatism, and risk-adjusted return analysis.
Companies and investors with a long-term perspective on value creation will pursue strategies consistent with this idea of sustainability.
We use the discipline of ESG analysis to identify emerging trends that may create disruption.
The convergence of technological, regulatory and behavioral change can help to identify both investment risk and opportunities. – Erika Karp
Currently, there are a lot of factors driving sustainable practices
Pension funds, endowments, and foundations
We are seeing real leadership from the major asset earners, like pension funds, which have to supply benefits for a very long time. There?s been incredible push by some asset earners such as pension funds, endowments, and foundations to think about our world as a system, and to view investments as existing within that system.
On the corporate side, there is aggressive movement towards transparency and disclosure. Corporations are asking how they can do what they do for the long-term. Even if there is an administrative or regulatory authority that’s entirely misdirected, the economics play out first. This amounts to great progress notwithstanding any misguided policy. The establishment of standards for disclosure of ESG factors by corporations further serves to drive innovation.
Today there is an unprecedented demand for the transparency of corporate sustainability and sustainable investment. We’re seeing a huge shift in the dynamics of the capital markets among asset owners, asset managers, investment banks, regulators, exchanges, accountants, and ?academics.
We are seeing social media driving transparency like we’ve never seen before. Big data is allowing all of that noise out there to become insight and companies are finding their corporate responsibility viewed under a microscope.
Massive inter-generational transfer of wealth
In addition, there is a massive intergenerational transfer of wealth. Over the next 30-40 years, an estimated 30 trillion dollars will transfer from the older to the younger generations.??The younger generations are really starting to explore what money and their financial life means to them.
Change in mindset on a grand scale
While it seems that, traditionally, people have been able to separate their?financial life from the rest of their life, today people are feeling a strong emotional need to resolve the inner turmoil they experience when their financial life is in conflict with their values and beliefs.
Even though trust in institutions has been destroyed, we can fix it because the discipline of finance is changing. It?s becoming more transparent and ultimately more democratized. For example, as an individual, if you work at a company and have a 401(k) but are not invested in any of type of impact funds, it is really just a matter of using your voice and expressing your demand.
A Change in Language
It?s true that the language on Wall Street has been purposefully inaccessible because that is what sustains the status quo and keeps the power structures in place. But all you really have to say as an investor is, ?I wanna put my money with a manager that believes I can get good financial returns and a good social impact. Can I please have those options?? And this needs to happen on a grand scale. There needs to be a lot of people asking for it, demanding it, and we need to see the voices rise.
It?s finally being recognized that the system of capitalism is broken and thereis afierce urgency of now. The magnitude of the problems that we have to address is not going to take millions, nor even billions. We need to move trillions now.
Cornerstone Capital has a lot of research on their website that they believe can empower people to take discussions about sustainable investing to the traditional investing mainstream, such as archaic investment committees or pension fund boards.
Use our research. Take it to the people you want to influence, and show them that there is no inherent underperformance as a result of considering your values in your investments. There are choices you can make as a consumer.??
There is a lot of retail education that you can get by researching by yourself, quite simply. Once you get your voice and really exercise it, that’s when it’s powerful. For example, if you have a 401(k), there is no downside to asking direct questions of the corporation you work for:
“Why can’t I invest sustainably? What do I gotta do? Who do I gotta talk to? Who is the board that represents my money? Let me talk to them.”
This article was derived from an interview with Erika Karp, founder, and CEO, and Sebastian Vanderzeil, Director and Global Thematic Analyst of Cornerstone Capital Group. For more interviews like this and other videos, check out the Prosperity Roadmap.
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.
Like it or not, there?s stuff that we need from our planet. We need food, we need water, and we need the land to get both of those things and much more. But that doesn?t mean that we have to tear the world apart to get it. We need to work with the planet, not against it. Conservationists understood this from the beginning and Larry Nielsen shows us why it matters.
Who is Larry Nielsen?
?Conservation is really understanding that it?s not save everything, or people are evil, but that?together, nature and conservation can produce great things.?
Larry Nielsen is a professor at N.C. State and the author of Nature?s Allies, a book that follows eight notable conservationists and their triumphs. Conservation and environmentalism sometimes get bad names (especially where I?m from.) But those movements aren?t just about humans sacrificing everything to stop taking from our planet. It?s just about being smart.
Back home, environmentalism conjures up images of people chaining themselves to trees to save rainforests. And sometimes that?s what’s needed. But Larry draws a line between environmentalism and conservation that removes that ?zero-sum? mentality.
?The conservation perspective is the important one, I think. We recognize that our lifestyle, our quality of life, is really a function of using nature well to provide the resources that we need.”
Instead of trying to stop every person in the world from taking from our planet, we can simply be smart. We can strategize about the best way to use the resources that we have so that they can sustain us for the long term.
Conservation is a young movement and a young discipline. It?s only about 100 years old – much younger than environmentalism. However, conservation didn’t start with environmentalists who wanted to stop taking from the planet. It came from hunters.
?The people who have supported conservation and developed conservation were originally hunters and fishermen. That?s where the conservation business came from. They were people who lived and enjoyed being close to nature, close to those resources. And they [were] the first ones to realize when things [were] going off the rails. And they were the ones that said we need to support conservation.?
Some people think of hunters and fishermen as people who take indiscriminately from the world around them. But think about the regulations that they have to follow. Hunting and fishing seasons create boundaries and limits on how much they can hunt or fish. Those controls establish a partnership between our planet and the people living on it.
The idea behind the controls for hunting and fishing are about creating a balance between what we take from our planet and what we leave alone. Those ideas can be extended to the energy we consume, the food we grow, the land we cultivate, and so many other vital industries. Conservationists don?t demonize you for harvesting from the earth. They just want to make sure we don?t overload the systems we rely on. I think Larry says it best when he says:
?It seems to me that the work of conservation is to find that balance, that genius, that allows us to live sustainably on earth with nature as a partner, rather than something to be conquered.?
Couldn?t agree more, Larry. Conservationists look for a win-win between the people living on this planet and the planet itself. That sounds like a pretty good partnership, doesn’t it?
If you?re even thinking about starting your own business, good for you. Nothing is harder than figuring out how to start a new venture, and nothing is more rewarding than getting your own paycheck. You might even want to start a business that supports great causes and promotes sustainability. And you can do that. There are plenty of successful companies that do good without compromising the bottom line. If you want your social good business to succeed, you need to honestly think through these three questions:
Just like any other business, your company needs customers. There are two different types of customers for a social-good business: the ones who love you for your business and the ones who love you for your social impact. Most of the people who walk through your door will be the first kind, so you need to offer them something that?s worth paying for and helps you accomplish your social good at the same time.
Georgetown, a Republican city in Texas, became the first in the state to commit to running on 100% renewable energy. The big sell didn’t come from the environmental impact it could have. It came from the lower energy prices and the greater price stability over the next 20 years. How’s that for some amazing benefits? Think about how you can accomplish your social good while running a successful business. Your social good benefit may not be the big seller, but your business can provide it in tandem with other benefits.
You might have an amazing idea that will change the world and give customers substantial value. But it won?t matter if you can?t deliver on your promises. Think about your idea and make sure that you can realistically make the leap from idea to successful venture.
One of my favorite horror stories is the Coolest Cooler. The Coolest Cooler was one of the most highly funded Kickstarter campaigns ever. It had all of these cool built-in features like Bluetooth speakers, a blender, a bottle-opener, a hidden compartment, and a bunch of other cool features (sweet, right?). It raised $13 million in 2014. But after only a third of the Kickstarter backers got their coolers, the Department of Justice got involved. Three years later, 20,000 people were still waiting for their coolers.
If you have a great business idea that people are willing to throw money at, you have to make sure that you can create and deliver it to them. That means your solar powered electric go carts idea had better be thought all the way out before you go ask for money.
Starting a business costs money and, if you?re like most entrepreneurs, you?ll probably have to ask someone to help fund operations. You have to accept one hard truth if you?re fundraising: No one will give you money if they don?t think they?ll make it back.?That means you have to work out the numbers to make sure that your great idea also makes business sense.
Tom?s Shoes is a great example of a business that is profitable and promotes great causes. Some of you probably wear Toms, but do you know why you pay so much for them? Part of the shoe price covers Tom?s One for One program which provides help to someone in need with every purchase. Tom?s used to just give a pair of shoes to someone with every purchase, but now they?ve partnered with charities that provide clean water, restore eyesight, and prevent bullying. If Toms can make almost $400 million a year with a business model that has purpose, creates a positive impact for society, and makes a profit, then you too can combine your passion with positive impact.
Tom?s Shoes can make money and give back to the world at the same time because they built it into their business and their prices. You can too if you think your business all the way through.
Learn more about companies that are doing well while they do good. Check out the B Corporation movement?and 1% for the Planet. Both of these communities certify for-profit companies that have positive impact on our society and the environment.
Do you know why massive companies like Microsoft, Uber, or FaceBook became so huge? They were early. They dove into industries that were either non-existent or very young, which gave them plenty of room to grow and become the dominant players in those industries. Sustainable business is a young and growing trend that your idea could grow to dominate. Think of all of the opportunities and new ventures that are there to create positive impact in the world. Imagine being the entrepreneur who seizes those opportunities.
Business can be powerful force for good. It can promote sustainability?and?create wealth and value. Whatever business you decide to start, know that you can both do well and do good. You just have to plan for it and execute on that plan.