The debate in the investment sector between maximizing returns versus consideration of ethics has taken an historic turn—as in eliminating “versus” and inserting “and,” according to Global Capital. That’s the summary of a report by the UN's Principles for Responsible Investment, based on 50 interviews with investors, lawyers, and regulators.
From the Editor
Coca-Cola and Pepsico are taking action to address climate change. Both companies have committed to reducing their dependence on high-carbon fuels, to increasing fuel efficiency in their vehicle fleets, and to becoming more transparent in reporting on progress. Their commitments join those from nineteen major companies to reduce or eliminate high-carbon fuels from their supply chains and/or environmental footprints.
New research shows that Millennials are big supporters of CSR, more so than the overall U.S. population. That’s the conclusion of the 2015 Cone Communications Millennial CSR Study. The numbers are emphatic. For example, more than nine in ten Millennials would switch brands to one associated with a cause (91% vs. 85% U.S. average).
Large companies have made more progress in reporting on environmental issues than on social responsibility. That’s the key finding of a three-year study by the Universities of Glasgow and Aberdeen, supported by the Economic and Social Research Council. The study reviewed 150 reports from large companies in the U.S., U.K., Germany, and other countries.
Two “expert” voices have just spoken up favorably about the future of solar power. Both statements come from very unexpected places. Shell CEO Ben van Beurden said, “I have no hesitation to predict in years to come solar will be the dominant backbone of our energy system, certainly of the electricity system.” Van Beurden went on to suggest that solar power is approaching a “crossover point” where it makes sense to invest in solar over coal, oil, and gas.
The London School of Economics Business Review launched a new blog last week to “improve knowledge-exchange activities connecting academics with the business community.” Posts are contributed by all LSE departments, alums, business leaders, think tanks, and academics outside LSE, across the U.K., Europe, and U.S.
The mainstream media still struggles with the concept of CSR as a business proposition.
Big changes in policies for new parents are being made by companies to meet the expectations of a millennial workforce, reports the New York Times. Microsoft has doubled its paid leave for women who have given birth to 20 weeks, tripled paid leave for all other new parents, and offers a half-time option to transition back into work. Netflix is offering fully paid leave for a year to new parents. Goldman Sachs has doubled its paid paternity leave to four weeks.
Gender diversity in the workplace took a step forward last week. The upper house of the Japanese parliament passed legislation requiring companies with more than 300 employees to set targets for female hires and managerial positions. The initiative was pushed by Prime Minister Shinzo Abe to help deal with an aging work force, a shrinking population, and a stagnating economy. A Goldman Sachs report projects that closing the gender-employment gap could lift Japan’s GDP by 13 percent.
The question comes up often: “Does CSR add to the bottom line?” A new report says definitely, and in ways that can be quantified. “Project ROI: Defining the Competitive and Financial Advantages of Corporate Responsibility and Sustainability,” initiated by Verizon and Campbell Soup Company to measure the benefits of their ESG programs, was carried out by IO Sustainability and Babson College.
Wind power accounted for 4.4 percent of U.S. electricity production in 2014, according to the Energy Information Administration. That production was subsidized by production tax credits of about $4.2 billion annually. But now, private equity is getting into wind energy with larger sums, according to Slate. The focus is on the transmission lines needed to carry the electricity produced by wind power to customers.
“Fintech”—the category of financial-technology firms that are innovating in the loan business—just got a winner. Online lender Social Finance has raised $1 billion from investors, setting its market valuation at $4 billion. That puts the four-year-old company in the top 30 of U.S. banks in market capitalization. The large investment, led by SoftBank Group, is the latest evidence that disruptive innovation in the consumer finance sector is attracting big bets.
A global market projected to grow from $250 million this year to $3.5 billion by 2024, throwing off $12.5 billion in revenues between now and then, sounds like a winner. That’s the revenue potential of biometric authentication when used in mobile devices within the healthcare industry, according to a recent report from Tractica, an analyst firm.
The fast-moving trend toward integrating ESG factors into investment decision-making just took another sharp turn upward. Morningstar, a research firm that tracks the holdings of 200,000 global managed products, has announced plans to launch the first ESG scores for global mutual and exchange-traded funds later this year. The scores will be based on ESG ratings from Sustainalytics, a provider of ESG ratings and research on more than 4,500 companies.
The Netherlands is one of the most densely populated countries in the world. Almost 17 million Dutch are crowded into 33,833 square kilometers, about 500 inhabitants per square kilometer. That density, along with Holland’s topographical vulnerability—half of the country’s land has been reclaimed from the sea and much of it is below sea level—has long made the Netherlands a leader in environmental innovation.
Here’s the numbers: in 1965, chief executives made 20 times as much as their employees. In 2013, they were paid 300 times more, according to the Economic Policy Institute. That exponentially growing disparity is the larger, social issue behind the SEC’s approval of a rule that would require large companies to reveal the ratio of the CEO’s pay to the median wage of all employees. The immediate impetus is the Dodd-Frank bill, which includes the ratio requirement.
Business leaders who are the fathers of daughters spend more time and money on corporate social responsibility than those without daughters. That’s the startling conclusion of a new report that analyzed 379 CEOs of the S&P 500 index. “Shaped By Their Daughters: Executives, Female Socialization, and Corporate Social Responsibility,” the study’s research is an eye-opener with all sorts of gender implications.
Controlling health care costs was the original impetus behind the reforms that eventually took shape as the Affordable Care Act. For the last six years, it looked as if that goal was working: from 2008 through 2013, health care spending recorded an average annual rise of four percent.
Europe continues to lead the way toward a renewable energy future. The latest report from the EC’s Joint Research Centre finds that wind energy provided the Continent with eight percent of its electricity in 2014. Further, the report projects rapid growth; by 2020, wind energy will account for 12 percent of all Euro electricity. Also noted: top user Denmark recorded 40 percent of its electricity generation as sourced from wind power.
Maybe it’s the summer slump, when traditional media scrounges for stories during the dog day doldrums, but articles about socially responsible investing continue to roll out. The latest is a Wall Street Journal overview noting that $8.2 billion has been placed in socially minded stock and bond funds since 2013, according to research firm Morningstar. Total assets in such funds have grown roughly 59% over the past five years to $72.6 billion.