“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.
From the Editor
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.
When Facebook went shopping for renewable energy for its new Fort Worth, Texas data center, the company found a gap between idea and reality. With plenty of cash flow and a commitment to operate the 200 MW facility entirely on wind power, it took more than a year for the social media colossus to buy wind power sourcing, reports Wired. And that was in Texas, where it is easier to buy renewable energy directly, due to a deregulated market which bypasses state-owned utilities.
Lost in the recent uproar about Germany vs. Greece in their financial fight has been Germany’s progress in shifting to renewable energy.
Only five states make healthcare prices available to consumers in a transparent way (New Hampshire, Colorado, Maine, Vermont, and Virginia). That’s the finding in a report from the Health Care Incentives Improvements Institute and Catalyst for Payment Reform. Consumers have long been in the dark about the costs of healthcare, and that lack of clarity seems to be ongoing.
The terms “corporation” and “crowdsourcing” have appeared in the same sentence about as often as “corporation” and “entrepreneur”—which is to say, almost never. That’s about to change, according to The Drum. With its Foundry IDEAS initiative, Unilever hopes to connect its business to entrepreneurial strategies. The company invites its community to respond to “grand challenges” such as sanitation, hygiene, and nutrition that are posted to the website.
The Supreme Court’s ruling that same-sex marriage is law nationwide has raised questions about health insurance practices by big business, reports Modern Healthcare. Under the Affordable Care Act, providers are required to offer married gay and lesbian couples the same health plans as those offered to married heterosexual couples.
“The battle for hearts and wallets, like the planet, is heating up,” concludes The Economist, in an article about the growing divestment campaign against energy companies that depend on fossil fuels. So far, 220 cities and institutions—including Stanford University’s $21 billion endowment—have divested holdings.
ESG-driven tools and products for investment continue to be developed by financial institutions to help investors, asset managers, and analysts more accurately define a company’s valuation. The most recent offering comes from Calvert Investments, which has launched a new initiative that it describes as “the next step” in the evolution of responsible investing.
The reasons for companies to be more sustainable are many: risk avoidance, consumer/society demand, cost savings from reductions in use of resources, lower costs of renewable energy, and a more motivated workforce. The final rationale is an enhanced bottom line with increased profits earned from sustainable strategies and practices. But the overarching principle could be summed up simply as good governance. Certainly, investors who are flocking to sustainable investments think so.
USA Today, the most widely circulated newspaper in the U.S., has discovered socially responsible investing. An “AdviceIQ” column gives an overview of the field for its large audience (average daily paid circulation: 1.8 million copies) in “Investing To Do Good.” Author Kimberly J.
In the U.S., we tend to think of Canadian companies as more like American firms than not, especially since so many are multinationals, and since so much Canadian business is closely integrated with U.S. markets.
The just-concluded G-7 meeting had many Big Issues on its agenda—Ukraine, sanctions against Russia, the overall stagnant European economy. Also on the list was an item about an unprecedented topic: supply chain standards. Globalization has brought heightened scrutiny to workers’ rights and environmental conditions in developing countries where goods for the world’s richer economies are produced. So far, business has taken the lead in addressing these issues.