Welcome to Delicate template
Header
Just another WordPress site
Header

Do investors care about CSR issues? 

Thanks to Capital Link for hosting their first annual CSR Forum called “CSR & IR – Maximizing Shareholder Value” yesterday in NYC at the astonishingly gilded Metropolitan Club.

I attended to hear first-hand from the investor community about how they make decisions, and whether CSR issues carry weight.

The answer, writ large? No.

What I heard is that Sustainability, CSR, resilience, whatever you want to call it, is still, still, not front and center.

It’s something that’s on the list, but not at the core of the decision-making process.

Maximizing shareholder value. That’s the core.

As one panelist put it, “When my CEO talks to investors, ESG factors aren’t part of the conversation.”

There’s a U.S. bias, too. Another shared that, “When my CEO talketo U.S. investors, I move the SRI slides to the back of the deck.”

The status quo. It’s powerful.

The highlight of the day for me was hearing Bennett Freeman from Calvert Investments finally mention Climate Change.

He, along with representatives from the Socially Responsible Investment world, were a welcome counterpoint to the traditional investor community perspective.

The status quo. It’s powerful.

For a flavor of the day, read what I and others tweeted live:

Tweet Story: March 13, 2013 Capital Link CSR Forum

Investors aren’t buying it.

Sustainability, that is.

Even though Sustainability-driven companies can compete and even perform their competitors and return value to their shareholders.

Here’s how BrownFlynn senior consultant Christopher Thomas put it in Greenbiz.com

“The vast majority of investment capital is still directed to assets judged best to deliver risk-adjusted appreciation rapidly with little direct concern for the environmental and social impacts core to the CDP and other ESG disclosures. “

Allow me to translate.

Most investment money gets placed on bets that deliver short-term monetary gains. Without concern for how a company hurts the planet or people.

That’s a problem. Because we need the investor community to start pouring money–on a global scale–into Sustainability-minded companies so that environmental and energy solutions get to scale.

Here’s the full article via Greenbiz.com:

Do investors care about companies’ climate change disclosure?

Taken at face value, more evidence surfaced this month supporting a close relationship between company market performance and the disclosure of environmental, social and governance criteria. Less clear is when more investors will reward ESG disclosure and inspire nondisclosing companies to get on board.

The sky’s not entirely bleak, though. I see breaks in the clouds from maturing and incipient reporting structures (CDP & GRI & SASB), disclosure requirements and shareholder involvement.

A few to check out:

Deloitte: Finding the Value in Environmental, Social, and Governance Performance

Carbon Disclosure Project: A third of the world’s invested capital calls for corporate environmental data through the Carbon Disclosure Project

ProxyPreview: Helping Shareholders Vote Their Values

Ceres: 2013 Shareholder Resolutions

I believe that the investor community can be encouraged to shift the status quo of short-term gains towards a longer-term Sustainability-driven approach. I take heart from the growing evidence that pressure–positive or otherwise–from shareholder resolutions concerned with climate change and energy gets results.

I just hope the shift happens soon enough to make a difference.

A picture’s worth a thousand words.

Here’s a lovely use of an infographic to tell the CO2 story.

It covers the what, how much, by when and so what questions compellingly and with imagination.

Via the beautiful minds at informationisbeautiful.net:

How many gigatons of CO2?….

1276_gigatons_CO2

 

 

 

 

 

 

 

Double click for bigger.

Simple stories help us understand.

The more complex your issue is, the more you need a simple story.

Which might be why Storytelling is so hot in Sustainability communications right now.

As well it should be.

Climate change is the quantum physics, the Abolitionist Movement, the Moon Shot of our time.

Think it can’t be done? Einstein and Lincoln figured out how to boil things down for their audiences.

Even with outlandishly complicated topics. Think E=mc2. And Lincoln’s second inaugural.

So did President Kennedy:

We choose to go to the moon. We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too.

Notice how simple they are?

And yes, I know that life is complicated and sometimes there’s more than one right answer. I get that.

That’s precisely why it’s all the more important that we tell the most important stories simply.

So people know why something is important, how they are part of it, and what they should do.

Simple stories pass the gut check. People can tell that you are telling the truth. (Liars use simple stories too, but that’s another post.)

If you want to learn about really good Sustainability storytelling, check out the creative people at Story of Stuff. Here’s their story:

Changing the way we make, use, and throw away Stuff so that we have a happier and healthier planet.

I heart the heck out of this twitpic they posted recently:

739199969

Simple, right?

Story of Stuff  is powered by storytelling firm Free Range,who I heard at the NYC Greenbiz Forum earlier this month.

This is Free Range’s story:

Great stories make great things possible.

Couldn’t agree more. They ran a workshop where we were all encouraged to come up with our own story.

Here’s mine (in process):

Writing for a bluer, greener world.

When you can tell a very simple story, you know who you are, and why you are here.

What’s yours?

Getting Sustainability solutions to scale is going to take a lot of money.

But at present, the investor community is not placing their bets on Sustainability-driven companies.

That’s a disconnect to me, because the business case for doing so is solid. Research  shows that businesses that make Environmental, Social and Governance (commonly known as ESG) factors part of their strategy do just as well in the marketplace. Sometimes even better.

The research borne this out in 2011, and it’s still true today.

Via Harvard Business School http://www.hbs.edu:

The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance

Finally, we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance. The outperformance is stronger in sectors where the customers are individual consumers instead of companies, companies compete on the basis of brands and reputations, and products significantly depend upon extracting large amounts of natural resources.

So why isn’t the investor community on board?

Cary Krosinsky’s work is all about understanding and bridging this gap between investors and sustainability. And, approaches for getting money flowing towards positive sustainability investments.

I heard Cary and Steve Viederman speak Mar. 4 on Getting Investors Engaged in Sustainability at the Bard MBA Sustainable Business Series.

Cary is Executive Director of the Network for Sustainable Financial Markets, and teaches Sustainability & Investing at Columbia University and University of Maryland.  Previously, he was senior vice president for Trucost, a company that helps organizations measure their environmental impacts. He’s also an author of Evolutions in Sustainable Investing: Strategies, Funds and Thought Leadership (Wiley Finance).

First, the bad news.

Status quo is strong.  The people who make investment decisions have deeply entrenched beliefs and behaviors about how to make money.  Monolithicly so. Cary’s company, the Network for Sustainable Financial Markets, just released research that finds only 1% of global assets under management overall are managed by investors looking at sustainability.

Via sustainablefinancialmarkets.net:

NSFM White Paper – The State of Ownership (the real size of SRI Assets + the Systemic Nature of Equity Ownership)

1%.

So at least we know where we stand. Now on to changing it.

Cary suggested a positive investing mindset to work with the status quo rather than against it. This means focusing on adding Sustainability-minded assets to a portfolio–what’s possible–rather than focusing on what we shouldn’t buy.   As an example, he mentioned Bill McKibben’s 350.org college endowment fossil fuel divestment campaign. Instead of lobbying to cull  fossil fuel-related investments from university endowments, a positive approach would be to add a percentage of Sustainability-focused investments to a university’s investment portfolio.

I’m really taken with this concept because it has significant potential to create change from the top-down. It’s really the simplest idea in the world. Put our energies towards finding sustainable solutions instead of stamping out fires. It takes more time and energy to say, “What should we do?” instead of “Stop that,” true, but these are conversations worth having. Taking the time it takes, takes less time.

I’m all in for the “and also” top-down, bottom-up, sideways innovating systemic solutions that keep us away from the brink of a 2 degrees-hotter planet. I believe in the scientific consensus about our world becoming fundamentally less hospitable to human life if we don’t.

Putting all issues of money aside, as climate change realities become the new normal (resource scarcities, extreme drought, rising sea levels), business and investors have real skin in fixing things.  If we don’t come up with cures for our environmental and energy problems, there’s not going to be a world in which to invest money.

Many thanks to the Bard MBA program for the chance to hear about Cary’s research and contributions to the Sustainable Investing field.

“Less bad is not good enough.”

The world is running out of time.

We need to do better. Much better. And a whole lot faster.

And we need to do it together, because the problems we face as a global community are interconnected and inextricably interdependent.

It feels impossible. But it’s not.

Here’s an inspiring framework for how to do it.

Seven Policy Switches for Global Security
NATO Advanced Research Workshop. Split, Croatia 17th-19th June 2009. Published Sept 2010. Publisher’s link for institutional readers.  Link to full paper for public discussion.
Author: James Greyson

This paper offers a selection of seven simple ‘policy switches’ (or ‘leverage points’ in complex systems).

Each policy switch offers an expanded vision of people’s role on Earth and a whole-system change to implement it.

Together the switches define a practical strategy for global security, for a serious attempt at revival of co-operation, ecosystems and prosperity.

This framework is not new. Just to me.

And it’s possible.

Here’s proof. Several sharp people on Twitter noticed how Sugata Mitra’s February 2013 TED Talk & TED prize-winning idea for a School in the Cloud fits Policy Switch 2 very nicely:

Switch 2: Learning led by curiosity, not routines.

Watch it:

Feb 2013 Sugata Mitra TED Build a School in the Cloud

If we build it, they will learn.

Inspiring.