It’s 2018 – Does Wall Street “Get It” on Corporate Sustainability and Sustainable Investment? A Noted Author Explores the Question...

G&A's Sustainability Highlights (01.02.2018)
Feb 6, 2018 1:15 PM ET

Does Wall Street finally care about sustainability?  A noted sustainability author (Andrew Winston) muses about this in the pages of the influential journal for the C-suite – the Harvard Business Review. Yes, we think – more and more asset owners and managers are getting aboard the train...but there is work to do.  And what about corporate boards and CEOs...”

(Sigh), this narrative begins with the common refrain we all hear at conferences and in conversations with IR and CFO and other financial folk:  “Even though climate change is already creating material risks and opportunities for companies, and expectation from stakeholders about social responsibility are clearly rising, investors are not asking CEOs about their sustainability performance.” 

Here’s the interesting question then posed by author Andrew: “But could that finally be changing?”

He cites the importance of the recent CEO-to-CEO letter by BlackRock’s Larry Fink and defines it as a “full-throated defense of both long-term value creation and corporate purpose.”

But... another sigh here from us – as he points out, this is the fourth year that Mr. Fink made the pitch for long-term thinking and sustainability and then analyzed the 2017, 2016 and 2015 letters to CEOs from BlackRock – largest asset manager in the world. (Hint: ESG, sustainability, are constant themes.)  There are certain words that are consistent across the communications: climate; diversity; value; long-term...

Andrew Winston picks up on an important element that we’ve been talking about with our clients at G&A Institute:  Trillions’ of investor dollars being managed by BlackRock are in “passive” investments (index funds, etc.) and so the old 1990s “Wall Street Walk” is increasingly a thing of the past.  You cannot easily walk away from a large-cap investment that in an important holding.

So, the conclusions for investor is: stand in place and make your stand; that is, for expecting more demonstrated societal responsibility and actions in societal issues by companies in your portfolio; by demanding more information about the issuer’s climate change policies, views, actions; and, in asking for the information about the company’s political contributions and lobbying fees (payments that are made with shareholder money) -- and whether these are really in the owners’ interests... and more.

This is just the introduction of G&A's Sustainability Highlights newsletter this week. Click here to view the full issue.