Ray Dalio wants to see more “social impact investing.” Yes, that Ray Dalio, author of Principles: Life & Work, a best-selling business book that proselytizes for “radical transparency” as guidelines for his hard-charging, high-octane hedge fund firm. As the founder, chairman, and CIO of the $160 billion Bridgewater, the world’s largest hedge fund, Dalio’s comments carry an equally outsized weight.
From the Editor
Investors are focusing on the healthcare sector, for a simple reason: “It's a high-growth sector that can deliver massive returns,” reports The Motley Fool, a financial investment advisory. But in a climate of radical disruption of traditional business models and ongoing uncertain policies going forward, making smart investment choices is a dicey job.
The trending topic of socially responsible investment has gotten yet another validating vote from an authoritative financial news source. In the first of a three-part series, The Economist’s “Sustainable Investment Joins the Mainstream” article focuses on the impact of the upcoming millennial generation on SRI.
Sustainability is being adopted by every sector of business. The wine industry is among the less obvious businesses to incorporate environmentally friendly and socially responsible practices. A combination of market forces—chiefly, rising consumer demand—and new requirements by buyers and sellers, from supermarkets to retail chains and restaurants are behind the shift, according to Sandra Taylor, author of The Business of Sustainable Wine.
Satya Nadella’s Hit Refresh is being touted as “Business Book of the Year,” and it’s easy to see why. The Microsoft CEO outlines an innovative and inspirational approach to leading a global corporation in the 21st century. “Anything is possible for a company when its culture is about listening, learning, and harnessing individual passions and talents to the company’s mission. Creating that kind of culture is my chief job as CEO.” Nadella outlines a three-point program that any company could follow with great benefit. “First, when we talk to customers, we need to listen.
The latest chapter in the unfolding Unilever saga has been published. An update in the Financial Times outlines CEO Paul Polman’s tale of pushback against a hostile takeover attempt by Kraft Heinz. It describes a classic struggle of long-term sustainability strategy vs. short-term focus on share price. Kraft Heinz, managed by 3G, a private equity firm, is known for severe cost cutting to produce immediate high returns.
Regular readers of Justmeans will recall several articles about how socially responsible investing is moving from its marginal niche into the wider universe of the investment sector. Increasingly, institutional investors, asset managers, and analysts are incorporating ESG factors into their decision-making. The US Forum for Sustainable and Responsible Investment estimates that now more than a fifth ($8.7trn) of the funds under professional management in America is screened on SRI criteria.
The tidal wave of predictions about next year’s trends has started landing in inboxes. One of the first to arrive so far is a list of top ten projections for healthcare in 2018 by Venrock Partners Bob Kocher and Bryan Roberts. The same authors’ predictions for 2017 were on the money eight out of ten of times—a success ratio of 80%. So what’s on the VC’s radar for next year? AI makes a large impact, the ACA is repaired (“finally”), Medicare Advantage plans gain in popularity, and big pharma gets bigger.
Institutional investors are pioneering another pathway in the still evolving field of socially responsible investing. “The recent launch of indices and funds offering smart beta incorporating environmental, social and governance (ESG) considerations indicates there is investor appetite out there. .
In the Quietly Making Progressive News department . . . our eminently sensible neighbors to the north are engaging in innovative research into sustainable agriculture.
A $400 million “gender equality bond” issued by Australia’s QBE Insurance Group turned out to be beyond popular: applications of more than $8.25 billion were received for the offering. Adding to its “wow factor,” the QBE bond is the first-ever such bond to be issued in a G3 currency—US dollars, euro, and yen.
There’s general agreement that more progress needs to be made more quickly on addressing climate change. It’s a refrain often heard at COP23, now underway in Bonn, Germany. Where will the impetus come from? A just-released survey by GlobeScan and SustainAbility finds that solutions will be driven by the private sector and other non-national state actors.
Sustainability is one big, baggy term for all sorts of practices and strategies. Generally, it stands for progressive efforts that include environmental, financial, and resource management as well as overall business model planning, to name just a few. When you drill down on to sustainability in a particular industry or sector, you get a much more specific definition.
“We are still in,” the association that promotes action to address climate change within the Paris accord, gets a major shout out from an op-ed in the Washington Post by Christiana Figueres, the former executive secretary of the UN Framework Convention on Climate Change.
CDP has named 160 corporations to its annual A List as “the world’s businesses leading on environmental performance.” CDP’s list is attracting more buy-in: the number of companies reporting to its investor program has risen 33% since 2013. This surge is attributed to increased transparency and measurement of environmental action on the part of companies. In a measure of how the A List has grown in importance, reporting companies now represent 56% of global market capitalization.
The Affordable Care Act continues to be a political—and now, practical—nightmare, thanks to blaring attacks and equally vocal support by different factions. Meanwhile, the health industry is quietly going about the business of continuing to innovate with new healthcare models. The latest good news comes from the Centers for Medicare and Medicaid Services, which reports nearly $50 million in savings from what is described as an “experiment” to keep nursing home residents out of inpatient care.
Are companies with more senior women more successful? Yes, argues Results at the Top: Using Gender Intelligence to Create Breakthrough Growth by Richard Nesbitt and Barbara Annis. Recent research confirms a pillar of the book’s claim—that businessmen with daughters are on point with this message.
The WSJ has published a downbeat assessment of CSR. The article cited a study showing that CEOs exiting Fortune 500 companies were 84% more likely to be fired if they invested strongly in good corporate citizenry yet recorded below par financial results than CEOs at poor performing companies that spent less on “do-good” initiatives.
A recent study finds that the cost of new ideas is rising, that more and more resources are required to produce breakthroughs, This data has led some to conclude that an era of economic revolution is over. Not so, says The Economist, citing the latest annual update from the World Economic Forum. Its ranking of global economic competitiveness records an upward tick for the US, from third to second place (behind only Switzerland).
I have just concluded panel moderating duties at the first Commit!Forum conference operated as a business unit of 3BL Media. At the MGM National Harbor resort in Washington D.C., I was privileged to interview some exemplary CEOs and later, to attend an awards ceremony that recognized their extraordinary leadership.