These days the comparisons of companies in sectors and industries and among investment peers (those companies chasing similar sources of capital) are continuing to gain momentum. There are numerous third party players busily analyzing, measuring and charting company ESG performance and producing scores, rankings, ratings and various kinds of comparisons (company-to-company, company to industry etc) for their investor-clients (asset owners and managers).
This week we celebrated Earth Day. That first (1970) observance became a catalyst for action – soon after the first of a series of environmental-focused Federal legislation began to change dirty air to cleaner and then clean, and more laws to address a very unhealthy state of affairs in the U.S.A. (The Environmental Act, Clean Water Act, Clean Air Act, RCRA, etc.). But…the challenges for society have not gone away. The list of “hot ESG issues” grows by the week.
“Movements” – what comes to mind when we describe the characteristics of this term are 20th Century examples. The late-20th Century “environmental movement” was a segue from the older 19th and early 20th Century “conservation movement” that was jump started by President Theodore Roosevelt (#26), who in his 8 years in the Oval Office preserved some 100,000 acres of American land every work day (this before the creation of the National Parks System a decade later).
The FTI Consulting business advisory firm surveyed a set of 130 global institutional investors to gauge the depth and breadth of U.S. assets invested using ESG principles. This group of investors, contacted from May through July 2018, responded that their Assets Under Management totaling US$8.4 trillion was believed to have benefitted by the contribution of extra [corporate] value to a company with a high ESG rating.
Question: Does a corporate sustainability program “cost” (and thus shows up on the “expense” side of the ledger) or are there measurable “returns” on the investments that companies are making to develop or adjust strategies, assemble teams and launch sustainability programs? (Especially those that have set goals and where progress is measured and then publicly reported.)
A 2018 survey by Morgan Stanley took the pulse of U.S. asset managers (with in-depth telephone interviews) to determine the level of adoption of sustainable investing approaches by asset managers in the United States.
Results: in the report “Sustainable Signals: Growth and Opportunity in Asset Management” a majority of managers said they now see sustainable investing strategies as a strategic imperative, explains Matthew Slovik, head of Global Sustainable Finance at Morgan Stanley.
Here we are in the new millennium, since 2000 or 2001 (the clear delineation has been debated) and the generation that straddles the 20th and 21st centuries has characteristics that may be quite different for employers (and as customers, investors, voters).
HBR Authors Share Some Research Findings Of Importance to Corporate Leaders and Asset Managers...
Strategy – the familiar word comes down to us over the eons from the language of ancient Greece. The roots of the original word (translated to “stratagem”) mean “the work of the generals, or generalship” which is to clearly say: to lead from the front..or the top!
“Ethical sourcing” – we see that a lot of companies are systematically addressing issues in their sourcing and supply chain management to better understand and address (and better manage!) the various issues that their investors, customers, employees, business partners, and other stakeholders care about. What is “ethical” behavior in the layers upon layers of suppliers in the usual globalized sourcing effort?