Advancing Toward a Circular New York

By Kirstie Dabbs – Analyst-Intern, G&A Institute

New York City’s latest OneNYC 2050 strategy outlines an ambitious sustainability agenda that includes goals to achieve zero waste to landfill by 2030, and carbon neutrality by 2050.

New Yorkers who track city- and state-wide environmental goals and regulations are likely aware of the importance of renewable energy and energy efficiency in achieving this climate strategy, but those actions alone won’t fulfill New York’s ambitions.

A circular economy must also be adopted in order to further reduce greenhouse gas emissions and waste, while also conserving resources. Although the OneNYC strategy does make note of this shift, many New Yorkers remain unfamiliar with even the concept of the circular economy, let alone its principles, practices and potential impact.

What is the Circular Economy?

Also known as circularity, the circular economy calls for a reshaping of our systems of production and consumption, and an inherently different relationship with our resources.

Rather than following our current “linear” economic model that extracts resources to make products that are used and disposed of before the end of their useful life, a circular economy follows three core principles to extend the value of existing resources and reduce the need to extract new resources:

  • Design out waste.
  • Keep products and materials in use.
  • Regenerate natural systems.

These three principles — as put forth by the Ellen MacArthur Foundation — create opportunities to reduce and potentially eliminate waste,  from the design phase all the way to a product’s end of life.

Materials Matter

In the design phase, the choice of materials plays a critical role in either facilitating or preventing recirculation of materials down the line. By choosing to manufacture products with recycled materials, companies will drive demand for more post-consumer feedstock, further reducing waste to landfill which is aligned with the City’s waste-reduction goal.

Companies can also choose to manufacture products using responsibly sourced bio-based materials, which enable circularity because they biodegrade at the end of life with the appropriate infrastructure in place.

WinCup and Eco-Products are examples of companies leading the way toward biodegradable paper and plastic cup alternatives. The regenerative process of biodegradation is in line with the third principle of circularity and supports New York City’s waste goals in bypassing the landfill altogether and heading directly to the compost pile.

Durable Design Increases Product Lifespan and Reduces Consumer Demand

In addition to applying material design principles to divert material from landfill, companies can deploy design and marketing strategies to keep their products in use longer.

Designing durable products and those that can be easily repaired not only leads to longer product lives, but also reduces waste and demand for new products. Creating products that will be loved or liked longer – such as “slow” fashion that won’t go out of style – is another tactic to extend the emotional use of a product.

Finally, companies such as Loop that combine durability with reuse offer a solution to the packaging waste dilemma by keeping long-lasting packaging in circulation.

According to a 2019 report from the European Climate Foundation, by recirculating existing products and materials, the demand for new materials will decrease, reducing environmental degradation and product-related carbon emissions.

How Will the Circular Economy Help Reduce Greenhouse Gas Emissions?

The same report also notes that in order to meet the carbon reduction targets outlined by the Intergovernmental Panel on Climate Change, we “cannot focus only on…renewables and energy efficiency” but must also ”address how we manufacture and use products, which comprises the remaining half of GHG emissions.”

A recent press release from the World Economic Forum (WEF) summarized it succinctly: If we don’t link the circular economy to climate change, “we’re not just neglecting half of the problem, we’re also neglecting half of the solution.”

New York’s Steps to Advance the Circular Economy

Although the principles of circularity can be applied to an individual’s or organization’s behavior, to fully achieve a circular economy the economic system as a whole must fully adopt these principles.

According to a recent report by Closed Loop Partners — an investment company dedicated to financing innovations required for a circular economy — the four key drivers currently advancing circularity in North America are investment, innovation, policy and partnership. All are important and increasing; we are seeing the private and public sectors collaborating to take advantage of the economic opportunity offered by circularity while executing this environmental imperative.

The New New York Circular City Initiative

Closed Loop Partners, along with several other private and public organizations, have come together to found the New York Circular City Initiative, officially launching this month.

One of several partners participating in the initiative is the NYC Economic Development Corporation (NYCEDC), and Chief Strategy Officer Ana Arino spoke last year of how the NYCEDC is well-positioned to inspire and implement city-wide changes leading to a circular economy through levers such as real estate assets; programs to support circular innovation; its intersectional position between the private and public sectors; and public-facing awareness campaigns.

The vision of the New York Circular City Initiative is “to help create a city where no waste is sent to landfill, environmental pollution is minimized, and thousands of good jobs are created through the intelligent use of products and raw materials.” Through engagement in this collaborative effort, the City is taking an important step toward circularity, that, if scaled, has the potential to make significant and lasting changes in the local economy—and beyond.

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Kirstie Dabbs is pursuing her M.B.A. in Sustainability with focus on Circular Value Chain Management at Bard College.  She is currently an analyst-intern at G&A Institute working on GRI Data Partner assignments and G&A research projects. In her role as an Associate Consultant for Red Queen Group in NYC she provides organization analyses and support for not-for-profits undergoing strategic or management transitions.

 

Profile:  https://www.ga-institute.com/about-the-institute/the-honor-roll/kirstie-dabbs.html

 

This article was originally published on the GreenHomeNYC blog on September 28, 2020.

 

The United Nations at 75 Years This Week – Corporate CEOs Around the Globe Pledge Support of the Missions

October 20, 2020

by Hank Boerner – Chair & Chief Strategist – G&A Institute

Three-quarters of a century of serving humanity — the family of nations celebrates the 75th Anniversary of the founding of the United Nations on October 24th.

After the global conflict of World War Two, with great losses of life, liberty and property, 51 nations of world gathered in San Francisco to put the Charter into force — to collectively explore a better way forward with collaboration not confrontation.  (The Charter was signed as the war was ending in the Pacific and had ended in May in Europe).  We can say that on October 24, 1945, the United Nations “officially” came into existence with the ratification of the Charter by nations and the gathering of delegates.

The United Nations members states — the global family of sovereign nations collaborating peacefully for seven-plus decades to address common challenges — got good news in its 75th anniversary year.

More than one thousand business leaders from 100+ nations endorsed a Statement of Renewed Global Cooperation, pledging to further unite in helping to help to make this a better world…for the many, not the few. Some of the world’s best known brand marketers placed their signatories on the document.

UN Secretary General Antonio Guterres received the CEOs’ messages of support at a Private Sector Forum during the recent General Assembly in New York (September).

The Statement from Business Leaders for Renewed Global Cooperation was created as the nations of the world are coping with the impacts of the Coronavirus, domestic and global economic slowdown, rising political and civic unrest, wars in different regions, critical climate change challenges, the rising demand for equality of opportunity, and more.

The corporate CEOs’ public commitments included demonstration of ethical leadership and good governance (the “G” in ESG!) through values-based strategies, policies, operations and relationships when engaging with all stakeholders.

Now is the opportunity, the statement reads, to realign behind the mission of the UN to steer the world onto a more equitable, inclusive and sustainable path. We are in this together – and we are united in the business of a better world.

“Who” is the “We”? Leaders of prominent brands signing on include Accenture, AstraZeneca, BASF, CEMEX, The Clorox Company, Johnson & Johnson, Moody’s, Nestle, Thomson Reuters, S&P Global, Salesforce, Tesla, and many other consumer and B-to-B marketers. (The complete list of large-cap and medium and small companies accompanies the Statement at the link.)

There are many parts of the global community’s “meeting place” (the UN) that touch on the issues and topics that are relevant to us, the folks focused on sustainability. Think of the work of:

UN Global Compact (UNGC)
This is a non-binding pact (a framework) to encourage enterprises to voluntarily adopt sustainable and socially responsible policies and report on same; 12,000+ entities in 160 countries have signed on to date (the Compact was created in July 2000).

UN Principles for Responsible Investing (PRI)
Founded 2006, this is a global network of financial institutions and others in the capital markets pledging to invest sustainably, using 6 principles and reporting annually; today, there are 7,000+ signatories to date in 135 countries; this is in partnership with UNGC and the UNEP Finance Initiative.

UN Sustainable Development Goals (SDGs)
The SDGs (17 goals with 169 targets) build on the earlier Millennium Development Goals MDGs- (2000-2015).

The Paris Agreement builds on the UN Framework Convention on Climate Change.

The UN Environment Programme (UNEP) plays important roles in protecting the world’s environment.

In all, there are almost three dozen affiliated organizations working to advance humanity through the United Nations System.

 

SHARED PERSPECTIVES: FAYE LEONE
With all of this activity, the UN needs support, and shared ideas, to build even stronger foundations. Our colleague, G&A Institute Senior Sustainability Content Writer Faye Leone, has a decade of experience reporting on the UN.

Her perspectives: “It is exactly right for business leaders to express support for global cooperation– not competition- at this time. This is in the spirit of the UN’s 75th anniversary and critical for the next big challenge for multilateralism and solidarity: to fairly provide a safe vaccine for COVID-19.”

She explains that leading up to its 75th anniversary in September 2020, the UN conducted a year-long ‘listening campaign”. The results, after over one million people around the world participated!

They said they do not want “more of the same” from the UN.  They overwhelmingly called for a more inclusive, diverse, and transparent UN that does a better job of incorporating businesses, cities, vulnerable peoples, women, and young people. They also said the UN should be more innovative.

(View Source)

The Sustainable Development Goals, says Faye, can help with that.  The 17 goals “provide a common language for everyone to combine their strengths. According to the head of B Lab, business’ role is to participate in delivering on the SDGs, use the power of business to solve the world’s most urgent problems, and inspire others to do the same”.

(View Source)

Read more about the UN’s 75th anniversary through Faye’s work with IISD here.

Read more about the UN’s 75th anniversary here.

Mark October 24 on your calendar. That’s the day we commemorate the UN’s official founding after WW II (on 24 October 1945). We invite you to think about how you can support the UN moving toward the century-of-service mark in 25 years (2025) – and what ideas you can share to help this organization of the family of nations to address 21st Century challenges!

TOP STORY

Celebrating Highlights Issue #500 – And Unveiling a New Design

October 16, 2020

by Hank Boerner – Chair & Chief Strategist – G&A Institute

Celebrating Highlights issue #500 – this is a landmark achievement, we will say, for this is also the tenth anniversary year of publishing the G&A Institute’s weekly newsletter (G&A Institute’s Sustainability Highlights).  As you will see in reading #500, we are also introducing an enhanced format intended to make the newsletter easier to read or scan as well.

Our G&A Institute’s Sustainability Highlights newsletter is designed to share timely, informative content in topic/issue “buckets” that we think will be of value to you, our reader. So much is happening in the sustainable investing and corporate sustainability spaces these days – and we are working hard to help you keep up to date with the important stuff!

Publishing the Sustainability Highlights newsletter is a team effort here at G&A.

Our company was formed in late 2006 and among our first efforts, Ken Cynar, then and now our Editor-in-Chief, began the daily editing of the then-new “Accountability Central” web site with shared news and opinion. The focus was (and is) on corporate governance, environmental matters, a widening range of societal and corporate-society issues, SRI investing, and more.

Two years later we created the “SustainabilityHQ” web platform – Ken manages content for both platforms today.

Back in those early days there was not the volume of ESG news or opinion pieces that we see today. Whenever we “caught” something of note the rest of the G&A team would quickly share the item with Ken.

Our team had worked together (some for a number of years) at the former Rowan & Blewitt consultancy, specialists in issue management, crisis management and strategic communications for the fortunate Fortune 500s.

That firm was acquired by Interpublic Group of Companies and after 7 years the New York City team created G&A Institute to focus on corporate sustainability, responsibility, citizenship and sustainable & responsible investing.  All of us came equipped with a strong foundation of issue management, risk management, critical issues managements, and corporate communications experience and know-how.

“ESG” had just emerged as a key topic area about the time we began our publishing efforts and soon we saw a steady flow of news, features, research reports, opinions & perspectives that we started sharing.

We had worked on many corporate engagements involving corporate governance, environmental management, a range of societal issues, public policy, and investor activism.  Here it was all coming together and so the G&A enterprise launch to serve corporate clients!

By 2010, as we emerged from the 2007-2008 financial markets debacle, then-still-small-but-solid (and rapidly expanding) areas of focus were becoming more structured for our own information needs and for our intelligence sharing, part of the basic mission of G&A from the start. And so, we created the weekly Highlights newsletter for ease of sharing news, research results, opinion & perspectives, and more.

It is interesting to recall that in the early issues there were scant numbers of corporate CSR or sustainability etc. reports that had been recently published (and so we were able to share the corporate names, brief descriptions of report contents, links of those few reports).  That trickle soon became a flood of reports.

But looking back, it was interesting to see that at the start of the newsletter and our web sites, there were so few corporate sustainability / responsibility reports being published we could actually post them as news for readers. Soon that trickle of corporate reports became a flood.

A few years in, The Global Reporting Initiative (GRI) invited G&A to be the data partner for the United States and so our growing team of ESG analysts began to help identify and analyze the rapidly-increasing flow of corporate reports to be processed into the GRI’s global reporting database.

Hank Boerner and Lou Coppola in the early days worked closely with Ken on the capturing and editing of content.  Lou designed the back end infrastructure for formatting and distribution.

Amy Gallagher managed the weekly flow of the newsletter, from drafts, to layout and then final distribution along with the coordination of a growing body of conference promotions with select partner organizations.

And now with a solid stream of content being captured today, all of this is a considerable effort here at G&A Institute.

Ken is at the helm of the editorial ship, managing the “AC” and “SHQ” web platforms where literally thousands of news and opinion are still hosted for easy access. He frames the weekly newsletter.

Today Ken’s effort is supported by our ESG analysts Reilly Sakai and Julia Nehring and senior ESG analyst Elizabeth Peterson — who help to capture original research and other content for the newsletter.

Hank and Lou are overall editors and authors and Amy still manages the weekly flow of activities from draft to distribution.  Our head of design, Lucas Alvarez, working with Amy created this new format. As you see, it is a team effort!

There is a welcome “flood” — no, a tidal wave! — of available news, research and opinion being published around the world that focuses on key topic areas: corporate sustainability, CSR, corporate citizenship, ESG disclosure & reporting, sustainable investing, and more.  We capture the most important to share in the newsletter and on our web sites.

We really are only capturing a very tiny amount of this now-considerable flow of content, of course, and present but a few select items in the categories below for your benefit.  (The target is the three most important stories or items in each category.)

Much more of the ongoing “capture effort” is always available to you immediately on the SustainabilityHQ web platform (see the “more stories” links next to each category of headlines).

We hope that you find Sustainability Highlights newsletter of value. It’s a labor of love for us at G&A, and we would like to get your thoughts and feedback …including how we can continue to improve it. Thanks for tuning in all of these years to our long-term readers!

TOP STORIES

As example of the timely news of interest for this week we offer these (two) commentaries on the Sustainability Development Goals (SDGs).  We are five years in/with 10 years in which to make real progress…where do you think we are headed?

As students and faculty head back to campus – there’s discussion about “sustainability” and “campus”:

 

Americans Tuning in to Sustainability During Crises, Expecting “More” from Government and Corporate Sector

August 27 2020

by Hank Boerner – Chair & Chief Strategist – G&A Institute

According to responses to a June on-line survey of 2,000 adults in the U.S.A. for “clean manufacturing” leader Genomatica, sustainability is now a top-of-mind issue, with an overwhelming majority (85% of respondents) of Americans indicating they’ve been thinking about sustainability the same amount or more…and 56% want brands and government to prioritize sustainability even in the midst of the crises (Coronavirus, economic downturn – plus civil unrest).

According to Genomatica CEO Christophe Schilling: “The collective consciousness on sustainability is rising, and certainly faster than most would have expected during these unprecedented times.

While this shift has been underway for decades, and is particularly strong in Europe, many of us in the U.S. have been inspired by the rapid improvement in air quality and traffic that shine a bright light on how our behaviors and decisions impact our environment and quality of life.”

Other interesting survey findings:

  • 59% of Americans say working from home is more sustainable than working in an office.
  • 37% of Americans are willing to pay a little more for sustainable products, even during an economic downturn. Gen-Z is the most willing age group, at 43%.
  • Half of Americans won’t be comfortable using sharing economy services like Uber or Airbnb (53%), riding public transportation (54%) or carpooling (50%) until there is a vaccine, if ever.

There’s more findings in the Top Story link below:

Part of the “sustainability thinking” is about personal investments…and how to do well financially while doing good with one’s financial activities.

A new report published by the foundation of The Forum for Sustainable and Responsible Investment (US SIF) explores the growth of passive ESG investing and the outpace of investor flows into passive vs. active ESG funds.

The report shows that “net flows into passively-managed ESG funds have in recent years outpaced net flows into their actively managed counterparts” — despite the fact that “the vast majority of sustainably-invested assets are in actively-managed ESG funds.”

Meg Voorhes, Director of Research at the US SIF Foundation explains:  “The advent of passive ESG funds provides more options to investors seeking sustainable impact, and we encourage these fund managers to make commitments to comprehensive ESG approaches.”

Follow Up to Last Week
In last week’s Highlights we told you about Morgan Stanley’s pioneering move to join the Partnership for Carbon Accounting Financials (“PCAF”).  The update:  Citi and Bank of America are on board, too.  Great news moving toward the low-carbon economy. 

Citi, Bank of America join Morgan Stanley in carbon-disclosure group

Individual news releases from the banks with the details:

As “Corporate Citizen” Working In Many Lands – This Can Be Challenging, As Corporate Experiences With China Show…

Another in the series The Corporate Citizen and Society – the Dynamics of the Relationship

Started in Autumn 2019 – drafting interrupted – further edited in June 2020 – and posted in September 2020. 

by Hank Boerner – Chair & Chief Strategist – G&A Institute

Running a multi-national business today is quite challenging, especially for firms with “footprints” of size in countries beyond the homeland.

Recently we have been watching some critical events…at times crisis situations…that senior executives are navigating. 

Of course, corporate leaders are responding to the Covid-19 pandemic – and civil protests in many cities and towns related to equality issues and objections to current methods of policing. – and the economic dislocations of the virus and more.  

For large multi-nationals with a presence in many different nations – sourcing there, or with local facilities in operation, or with products and services extensively used in the countries, with partnerships established with the public sector or NGOs – the challenge of being a “good corporate citizen” is ever-present. And sometimes can be daunting.

Challenges? Think about those related to continuing “freedom to operate” or “social license” or actual regulatory license to operate that may be placed in jeopardy in some way or another. 

Something done, something said (or published or communicated)…with the foreign governments objecting to that “something”.– and threatening to or taking action to limit the freedom to operate. 

When I began drafting this commentary last fall, tiny bits of news about the Coronavirus was just beginning to be reported out of China, with very sketchy details.  By year end, It was a kind of flu. Nothing to worry about. 

In the news headlines at that time (summer into fall 2019) there were more obvious challenges being presented to non-Chinese tech companies as the Hong Kong people protests continued to build momentum, and the Communist government in the mainland began to put pressure on the corporate sector (perhaps pressuring foreign companies’ media that had China news coverage).

An example of this kind of threat came to us in October 2019 involving Apple — concerning its vital relationship with the “two Chinas” – and with significant production and retail stores on the mainland — the People’s Republic of China being the #2 global market for Apple sales.

Other non-China-based companies have also being feeling the pressures as well.  

Just offshore from mainland China, trouble was quite evident to the world in the former British territory of Hong Kong, which is a kind of status aparte of the mainland. (That is similar to the status of Aruba in the Caribbean Basin to parent country The Netherlands.)  China has maintained a “one country-two systems” approach to Hong Kong. Until now. 

China gained re-sovereignty over the Hong Kong territory in 1997 with the execution of a treaty at the end of the United Kingdom’s 99-year lease. The treaty terms were meant to assure separate governance systems for the more advanced Hong Kong economy and territory’s political system of that era.

Early in October 2019, an Apple device software application – Hkmap.live – developed by an outside firm and sold through the Apple Store, was removed from the on-line store. 

The concerns:  Reuters News and Associated Press reported that the Communist Party’s main newspaper (the People’s Daily) had singled out Apple for criticism for having the third party app for sale (and used on smartphones)  that reportedly enabled Hong Kong protesters to track the local police activity.

The People’s Republic of China’s propaganda arm (the publication) said this was a no-no – that is, Apple making the app available — and Apple removed the app because it “violated the rules,” according to the Reuters/AP report at the time.  (Reason: the app could be used to ambush police and by criminals where police were absent – the Apple rules allow for removal when the app is found to facilitate illegal activity.)

Apple had first rejected HKmap.live — then agreed to make it available — and then as the protest mounted (and mainland China responded), the app came off the App Store.

Was it the People’s Daily targeting of Apple and the app…or what the company said (“…many concerned customers in Hong Kong contacted the company…”).

An MSNBC commentator (Kif Leswing) weighed in, pointing out that Apple also removed a news stream (Quartz) because the content is illegal in China. Quartz was covering the Hong Kong democracy protests.

This is/was not a new issue: Back in 2017 several U.S. Senators presciently charged that Apple was enabling the Chinese government’s draconian moves on censorship and citizen surveillance.  (Which moves, according to news reports of today, involves collecting everyone’s DNA and placing cameras everywhere to track everyone – plus developing a “social profile” for tracking the movements of citizens — and meting out punishment where officials think it is merited.)

We note here that Google also quietly removed Hong Kong protest content from the Android store — without creating Apple-type headlines.

But – for those who had downloaded the app, it continued posting locations of police patrols, so said The Los Angeles Times.

MSNBC noted that Apple more than other tech companies has a very close relationship with China (where 200 million-plus iPhones are made each year) and China is an important market as well with tens of billions in revenue in total from the “three Chinas”.  (For Apple, China is the #2 market for iPhones.)

The third China: the separate nation of the Republic of China, more generally known as Taiwan, and persistently claimed by the mainland as part of its territory. “China” is a complicated subject for many company managements. And then there is Hong Kong and nearby Macao, outposts of China mainland.)

Apple CEO Tim Cook sent a memo to Apple’s 130,000 employees to explain the move. And we can assume try to calm nerves internally.

US Senator Josh Hawley (Missouri) quickly posed the question:  Who is running Apple…Tim Cook or Beijing?

If We Don’t Agree — We Will Name & Share – Beware of the China Leadership

Brands targeted by China’s rulers have been subjected to campaigns (name and shame) to alert local customers of issues with a company or organization.

This could become more of a threat to non-Chinese companies as the government continues to develop the “social profile” of its citizens. And captures their imagines on street cameras. Which company’s products they buy could become a major issue in the western democracies!

Further complicating life for execs — we’ve seen the rise of internal protest inside U.S. tech companies, when employees don’t like the work being done for customers –particularly government agencies, police departments, intelligence agencies, military branches, etc. 

Business-society relationships are complicated. Sports is a big business in the USA. The National Basketball Association is a powerful sports enterprise now with global reach and the ownership universe (the key decision-makers) is made up of corporations and wealthy partnerships that own local sports teams. 

So – when the manager of the Houston Rockets briefly voiced support of the Hong Kong protests — the state TV in China stopped the broadcast of NBA games.  Pow!

Senator Majority Leader Mitch McConnell (R_Kentucky) quickly weighed in: “The people of Hong Kong have risked much more than money to defend their freedom of expression, human rights and autonomy.  I hope the NBA can learn from that courage and not abandon those values for the sake of their bottom line.” (The NBA apologized for the Twitter comment of the Houston team GM. It’s not comfortable being in the middle of intercontinental cat fight.)

Complicating matters: Majority Leader McConnell’s wife – Secretary of Transportation Elaine Chao – is a Chinese-American born in Taiwan. She was Secretary of Labor under President George W. Bush (and therefore an overseer of U.S. fiduciary investment policy-making at the DOL, affecting decisions of many large investors.) More complications in public and private sectors, we could say.

The Houston basketball team has been very popular in China and a star player (Yao Ming) played for the team.   The U.A. Senate majority leader is a constant critic of China policies. Complicated matters for companies doing business in and with China!

Senator Ted Cruz (R-Texas) also weighed in:  “We’re better than this. Human rights should not be for sale and the NBA should not be assigning Chinese communist censorship.”  Remember, his father fled Communist Cuba to come to the U.S.A.

The aggravated condition of U.S.-China trade relations under the Trump Administration is also complicating things. 

One, Two, Three Chinas – It’s Complicated

We should explain that the “ Two Chinas” policy of the United States government should now be considered as “three,” as the identification has traditionally meant the relationship of [mainland] Communist China and the offshore democracy of the Republic of China (Taiwan) to the USA.

The Nationalist ROC has governed the island nation since the end of civil war of 1949 when many mainland refugees fled to Taiwan as the Communists came to power.

With China moving aggressively toward Hong Kong independence-of-a-sort, the Trump Administration and members of Congress are talking about possible actions to attempt to ensure some independence of the little territory.  

Another dustup:  Hollywood’s Dreamworks and a China production company (Pearl Studio) collaborated to create an animated feature – “Abominable” (about a young girl meeting the Abominable Snowman or “Yeti”).  The film features Asian-American actor and was quickly a hit on release in America.

The film debuted in Vietnam as well – and was quickly pulled from viewing.  A map of China used in the animation showed the “nine dashes” – a no-no in China’s neighboring countries.

The Nine-Dashes – Complicating Matters in the South China Sea

What are the 9 dashes, you might ask?  (I’m sure that question rapidly went ’round in Dreamworks’ Hollywood offices — what the hell!.)  China attempts to impose its authority over the South China Sea with a series of dashes (not firm lines) to imply control or ownership. 

Which angers neighbors — Vietnam, Taiwan, the Philippines, Malaysia, and other nations with access to the vital sea lanes.  And those nations are trading partners of the U.S. — and American companies have significant presence in them.

How many people in corporate suites are tuned in to the vagaries or subtleties of China’s diplomacy!   

We recommend that you read Foreign Affairs and China-scholar Robert D. Kaplan’s excellent book on all of this — red warning flags flying! — “Asia’s Cauldron:  The South China Sea and the End of a Stable Pacific.”  Published in 2014 – available on Amazon. 

Simply stated –  “China” – it’s  a complicated subject for corporate citizens.

The China – United State of America Relationship

Former Secretary of State Henry Kissinger has said that the USA-China relationship with shape the international order for the 21st Century and the countries will have to deal with serious cultural differences (like freedom of expression and the right to protest and the freedom to trade etc.).

We saw that the investors in the USA shrugged off the Apple dustup with China over the Hong Kong protests. The share price was up $6.00 (3%) and moving toward an all-time high as the China-Hong Kong-APPL news stories appeared… this is a US$1 trillion-plus company! (Well, after the coronavirus crash of March 2020, we did have to check again and the price is back up in high $300s.)

Challenge: Being a Good Corporate Citizen When You Are a Guest

For large corporations, in general, worldwide, being a “good corporate citizen” in many lands is always a concern and a challenge as well as a competitive advantage (the brand and reputation and consumer favor as a 21st Century moat) — but things can be very complicated in the execution of citizenship on the ground. 

Complicated Challenge: Some companies operate in literally all but three or four nations of the world, excluding Iran, North Korea and perhaps a few others from their operations and marketing activities.

As we first prepared to finally publish this June 2020, dusting off the earlier Fall 2019 draft, we were in the midst of a global epidemic (COVID-19), and U.S. and global civil protests — with the news coverage all but eliminating the news out of Hong Kong on some days.

But China actions focused on western business organizations are very much in focus today. Recently several large news organizations (corporate-owned, of course, and at the top, corporate board and C-suite managed) saw their in-country journalists booted out of China because the Communist leaders objected to their news coverage.

Journalists employed by The New York Times (owned by The Times Company); The Wall Street Journal (owned by News Corp); and The Washington Post (now owned by Jeff Bezos, head of Amazon) were told to leave mainland China and the “regulated territories” of Hong Kong and Macoa.

In September 2020 we learned that Australian journalists had fled China to avoid detention. 

The leaders of the People’s Republic of China, it is said, are angered by coverage of the coronavirus (and the Communist government’s response); coverage of Hong Kong protests; and the reporting of “shadowy business dealings” of the country’s government leadership.

In addition, Time magazine (now owned by Marc Benioff, head of Salesforce) and the Voice of America – AND the expelled media organizations — were instructed to turn over information about their operations to the government minders.

U.S. Retaliation Complicates Corporate Life

This is not happening in a vacuum – in Washington, D.C., President Donald Trump designated the five China media organization operating in the USA as government functionaries of China, limiting the number of Chinese citizens who could work in the U.S. as journalists. The five are propaganda tools, the charge goes.  Their activities are being restricted. 

And so here in the USA the tit-for-tat is targeting China’s main news outlets –– Xinhua, CGTN, China Daily, People’s Daily, China Radio.

The Trump Administration is also moving to de-list publicly-traded Chinese corporations (traded on American stock exchanges). 

In all of the dustups, as U.S. business leaders are deftly navigating the tricky shoals where the seas of statesmanship meet the rocks of ideology and pose challenges to strategy and business models. 

Some of the challenges in the US-China relationships are about freedoms.  Such as our First Amendment freedoms. There are no China equivalents. 

President Franklin Delano Roosevelt set out four important freedoms for the peoples of all nations during the early days of World War II  — freedom of speech and religion, freedom from want and fear. These have long been central to many elements of U.S. and western capitalism — and foreign concepts to the rulers of present-day China. 

American companies have to carefully navigate the differences when they do business in China, with China, and other non-democratic nations. 

An example getting news coverage this week:  The Walt Disney Company, a U.S.-based global entertainment and communications company.  The company has been a  very able and savvy global marketer since the earliest days of Uncle Walt’s cartoon studio in sunny California.  Founder Uncle Walt always innovated and marketed that innovation far and wide. 

Consider that Disney has a $5 billion-plus investment in Shanghai Disneyland Resort (opened 2016) — co-owned by the Communist government — and an older Disney park in Hong Kong.   China is an important market for various activities of the company, including motion pictures.

And so the anxiety we logically could expect in the Disney offices as a new dustup occurred.  The company created “Hulan”, a movie about an important character (female) in China mythology, with a China-born female lead and a female director, and scenes filmed in China for accurate depiction of locations for the story. 

One snippet of the 1 hour/50 minute film — the usual (traditional) roll of credits at the end named a number of governments within China as assisting. Including Xinjiang, rolling by in a long list.  Where other American companies operated.  And where in 2018 as the film was underway, the local government was locking up tens of thousands of Muslims in concentration camps!  And so the September 2020 criticism of The Walt Disney Company — including by two dozen members of the U.S. Congress. 

There’s a thorough, fair and balanced recap of all of this in The New York Times, Sunday, September 13, 2020 (“How a 1 Minute of Scenery in ‘Mulan’ Put Disney in a Bind Over China”).    It’s an important read for you, I think, in the context of U.S.-China relations and for non-China-based companies operating in the country. 

Thinking about “open” communication not being permitted today in China we are reminded of President Thomas Jefferson’s perspective: “The only security of all is in a free press. The force of public opinion cannot be resisted when permitted freely to be expressed. The agitation it produces must be submitted to. It is necessary, to keep the waters pure.” – Thomas Jefferson letter to the Marquis de Lafayette.

So true some two centuries later in our great democracy!

 

Corporate Sustainability Reporting – Frameworks, Standards, Guidance – Summer 2020 Update

Have You Heard? Despite the Global Crises, Corporate ESG/Sustainability Reporting Momentum Continues to Build – Here, Some Updates For You on Focused on Corporate ESG Reporting Frameworks and Standards

By Hank Boerner – Chair and Chief Strategist – G&A Institute

This has been a challenging year. In January when I do my usual “crystal-balling” for the new year, the coronavirus was fast-spreading in Wuhan, China, and the world outside had not yet awakened to the serious threat the early infections posed to we humans.

The U.S. equities market looked very promising – but the markets would tank in March and then slowly recover. (As we write this the Nasdaq numbers and S&P 500 Index® levels have investors cheering – look at Nasdaq and the S&P 500!)

Despite the upheavals in 2020, Reporting Standards and Frameworks are continuing to evolve and especially to become more investor-focused

Investors, public companies’ executives, and sustainability reporting Standards and Frameworks organizations are not slowing the pace on advancing ESG / Sustainability / Corporate Purpose / Sustainable Investing et al, and advancing the cause by various means in this Summer 2020.

In the event that you have been busy this spring and summer (haven’t we all!) and perhaps missing something here and there, here are news items & developments for you to illustrate the forward momentum and increasing importance of ESG “etc” matters.

This update is focused on ESG reporting frameworks, standards and ESG disclosure guidance – this is the daily work of the team at G&A Institute.

UN Global Compact Celebrates 20 Years – And Builds on the Progress

It is 20 years now since the founding of the United Nations Global Compact (UNGC) and the organization released its look back/look ahead report, “Uniting Business in the Decade of Action”. Each year the Compact surveys its participants to gauge the progress being made (or not).

This year the survey included a review of progress in complying with the Ten Principles of the Global Compact – and – corporate contributions to the achievement of the Sustainable Development Goals (SDGs).

2020 Survey Findings:

  • 30% of companies responding believe they have targets sufficiently ambitious to meet the 2030 goals of the SDGs.
  • Fewer than a third of respondents consider their industry moving fast enough to deliver on prioritized goals.
  • Good news: 84% of UNGC corporate participants are taking some kind of action on SDGs.
  • Not-so-good: only 46% are embedding the goals into their core business.
  • Only 37% are designing business models to “contribute” to the 17 goals.
  • 61% say that their company provides some kind of product/service that contribute(s) to the progress of the SDGs (that level was 48% in 2019).
  • 57% measure their own operations’ impact on the SDGs.
  • 13% extend this to their supply base; and only 10% extend this to raw materials and product use.
  • 29% of companies advocate publicly to encourage action on the SDGs (this is a slide down from over half of companies in 2019).

Many companies focus on Goal 8: Decent Work and Economic Growth; and Goal 9: Industry, Innovation, and Infrastructure; less traction was noted for “socially-focused” goals (reducing inequality, gender equality, peace & justice).

The General Secretary of the United Nations has called on corporations to align their operations and strategies with the Ten Universal Principles of the Global Compact.

We are half-a-decade in now since goals adoption – with only one decade to go (years 2020 to 2030) to achieve the objectives.

More than 10,000 companies and 3,000 non-business entities (“signatories”) are participating in achieving the goals in some way, operating in 160 countries — and so, the UNGC has become the world’s largest corporate sustainability initiative.

Has your company signed on to the UNGC? Selected SDGs to build into your core business strategy and models? There is guidance for you in the UNGC report. https://unglobalcompact.org/take-action/20th-anniversary-campaign

About the SDGs – MSCI’s New “SDG Net Alignment Factors”

MCSI, one of the major ESG rating firms providing significant research and analysis results to its global investor clients, expanded the model for evaluating company-level alignment to the UN SDGs.

The new tools will help capital market players to enhance or develop ESG-themed investment services and products. 

Subscribers to the firm’s Sustainable Impact Metrics now have access to the SDG Net Alignment Factors, which measures revenue exposure to “sustainable impact solutions and support actionable thematic allocations in line with impact frameworks like the UN SDGs.”

This approach will help investors to better understand what a company is doing with respect to the SDGs, what progress the company is making (or not), and related metrics that are being disclosed.

Institutional investor clients can use the information provided in developing sustainable investing products and services.

Corporate managers should be aware that the SDGs are getting more attention now as the last decade is upon us for achieving progress on the 17 goals/169 underlying targets.

MSCI’s Approach

The MSCI approach was developed in collaboration with the OECD and takes a “net impact” perspective to evaluate alignments of companies based on product and operations for each of the 17 Sustainable Development Goals (and there are 169 underlying targets for these).

The approach to “help institutional investors:

  • Measure and report on the degree of SDG alignment.
  • Develop SDG-themed investment products.
  • Meet rising demand to channel capital toward addressing the objectives of the Goals.
  • Identify companies better aligned with the SDGs based on a well-rounded framework that looks beyond [corporate] disclosure and considers positive and negative alignment.

Corporate board members and C-suite leaders note: In evaluating your company, MSCI’s approach will include qualitative categories indicating the degree of alignment and scores that assess:

  • Each public company’s overall Net Alignment for each of the 17 SDGs.
  • Product alignment – focusing on products and services with positive and negative impacts.
  • Operational alignment – internal policies of the company, operating practices to address SDGs targets, involvement in controversial activities.

The new SDG Net Alignment Framework is built on the MSCI Sustainable Impact Metrics; these include:

  • New Sustainable Agriculture and Connectivity categories to provide additional areas where products and services align with the SDGs.
  • Expanded Fixed-Income coverage to align the MSCI ESG Ratings corporate coverage universe, bringing impact coverage to 10,000+ equity and fixed-income issuers.
  • Introduction of more granular “E” impact revenue sub-categories to enable a flexible application of MSCI Sustainable Impact Metrics to a broad range of impact and sustainability frameworks.

The new service for MSCI clients began in August.

Note the OECD is the Organization for Economic Co-Operation and Development, and part of its mission is to establish evidence-based international standards and finding solutions to social, economic, and environmental challenges.

GRI – The Choice of Many Corporate Reporters for Guidance

The Global Reporting Initiative has its roots in the United States, with foundational elements put in place by (in that day) socially responsible investors, a few companies, and some NGOs.

In 1989 in Prince William Sound, Alaska, the tanker Exxon Valdez spilled crude oil in the waters over several days. In response, in Boston, Trillium Asset Management under the direction of Joan Bavaria worked to create a new organization — the “Coalition for Environmentally Responsible EconomieS” (now, known simply as Ceres) and created the Valdez Principles for companies to sign (to pledge to be more environmentally-responsible).

These became the Ceres Principles and over time contributed to the creation of the GRI and its first framework (“G1”).

The framework was continually evolving, becoming G3 and G4 and what would be G5 (Generation 5) are now the GRI Standards, a powerful guide for public companies to use to examine and decide on “what” to disclose against the Standards.

Companies can choose to report against “Core” or “Comprehensive” levels.

GRI has also aligned the Standards with other reporting frameworks or standards so that publishing a “GRI Report” becomes a more meaningful and holistic presentation of a company’s ESG profile.

Note: G&A Institute is the designated Data Partner for the GRI in the United States of America, the United Kingdom and the Republic of Ireland. In this role, we gather and analyze every report published in these countries and provide the analysis to GRI for inclusion in its comprehensive, global report database.

This is the largest collection of corporate sustainability reports going back to the first issued using “G1” in 1999-2000.

What’s happening now:

In June GRI announced an update to the “Universal Standards”. These are planned revisions such as address concerns in Human Rights reporting to move GRI Standards “closer” to inter-governmental instruments such as the UN Guiding Principles on Business and Human Rights.

“Materiality” will be “re-focused” so that companies will report the importance of issues to stakeholders – rather than the customary approach of disclosing the results of a materiality assessment with focus on the company’s view of issues (regarding the economy, environmental matters, and people or human assets).

This will mean much more engagement with stakeholders to determine their perspectives to guide disclosures using the Universal Standards.

In the past, part of the guidance from the GRI was focused on “sectors”. Now, the organization is reviving Sector Guidance, which will support the Universal Standards. The sector guidance will link where possible with other frameworks and initiatives.

These steps are in the “disclosure draft” stage, with GRI gathering input to move to final adoption in 2021. GRI is inviting organizations – including companies – to be part of a “Global Standards Fund” to “safeguard and increase GRI’s to deliver the leading sustainability standards that encourage organizations to embrace responsible business practices.” It hopes to raise 8 million euros by 2022.

Climate Disclosure Standards Board – Guidance Issued

The CDSB Framework for climate-related disclosure is available for corporate reporters to build “material, climate-related information” in their “mainstream” reports. (That is, “the annual reporting packages required to audited financial results under the corporate compliance or securities laws of the country in which they operate.”)

Think of the 10-k in the United States or annual report in the United Kingdom, and similarly required filings.

The guidance is similar to that of the TCFD  recommendations – the Task Force on Climate-related Financial Disclosure (organized by the Financial Stability Board, an arm of the G-20 nations, with the Task Force headed by Michael Bloomberg).

Important note: CDP advises that connecting CDP data with the CDSB Framework will help companies to successfully fulfill the TCFD recommendations.

The CDSB has been working on the Standards since 2007, and over time reflected on such developments as the 2015 Paris Agreement (or Accord) on climate risk.

In discussions with company managers and in our monitoring of corporate disclosure as the GRI data partner in the U.S.A., we see a wide range of opinions on just what “integrated reporting” should look like.

For some companies (not to be cute here) it boils down to have a 10-k and ESG report at the same time, often combined. Side-by-side, stapled in effect for a printed report.

Other firms may put financial/economic information up top and then build out a sustainability report with volumes of ESG data. We don’t see a lot of tieing the implications of that data to financial results, with top and bottom line impacts clearly spelled out.

Bloomberg – Launching E, S & G Scores – Oil & Gas Sector First Up, Along With Board Composition Scores for Thousands of Firms

This month Bloomberg announced it was launching new, proprietary ESG scores for 252 companies in the Oil & Gas Sector – and Board Composition scores for more than 4,300 companies. The scores are available in the professional services terminals service.

For the “E” and “S” scores of the companies in the Oil & Gas Sector, Bloomberg is highlighting environmental and societal risks that are material to the sector.

For the Board Composition scoring, Bloomberg says it is assisting investors with information to assess how well a board is positioned to provide diverse perspectives, supervision of management, and assess potential risks in the current board structure.

ISS/Institutional Shareholder Services – New Data Points For Investors

The long-time governance ratings and proxy guidance organizations were originally focused on “G” – governance practices – and expanded its work into “E” and “S” scoring and evaluations two years ago. (The “G” work goes back four decades.)

Now, “ISS ESG” (the responsible investment arm) is providing “best in class” fund ratings that assess the ESG performance of 20,000-plus firms around the world.

The new ratings will draw on ISS’s ESG ratings, governance data, norm-based research, energy and extractives’ screens, SDG impact ratings, carbon emissions analysis, shareholder voting outcomes, and more…resulting in a composite, holistic picture of a fund’s ESG performance.

Funds will be rated on a relative scale of “1” (bottom” to “5”, based on the fund’s standing within the Lipper Global Benchmark class.

The service is intended to have broad utility for investment professionals, such as fund managers and investment advisors.

This is still one more layer to add to the complexity of the capital markets competition for public companies.

G&A Institute Perspectives:
Inside the publicly-traded company, there may be a lively discussion going on among participants as the sustainability disclosures are prepared – for example, legal teams may frown certain ESG data revelations at times.

“Who is asking for this” may be a determinant in “what” gets disclosed. Lots of negotiations go on, we can tell you. 

But every year, more and more ESG data sets and narratives are published and corporate leaders in sustainability reporting set the pace for industry and sector.

The various reporting frameworks, guidance, standards that are available to corporate managers are a positive – here, including the framework (guidance) presented by the Standards of the Carbon Disclosure Standards Board. Information: https://www.cdsb.net/

G&A Institute closely monitors the corporate sustainability reporting arena and will share with you more updates as we see the need.  

Lots going on in Summer 2020 — be in touch with us if you have questions about any of this!  We’d like to be your sherpas and guides and navigators on the corporate sustainability journey!

Who Do the Editors of Harvard Business Review Rank Among the World’s Top 100 Performing CEOs?

By Hank Boerner – Chair & Chief Strategist – G&A Institute

If you are a regular reader of these commentaries you will know that there are frequent references to the Harvard Business Review, the Harvard B-School, and prominent Harvard-affiliated voices.

The “HBR”, packed with management best practices content, is well-read by U.S. and global corporate leaders (circulation was beyond 300,000 [paid subscribers] in 2018 with more than 7 million unique visitors accessing content each month).

The magazine publishes an annual list of “The World’s Top Chief Executives”. The rankings, HBR editors explain, relies on objective performance measures over the CEO’s entire tenure, and are not rankings relying on short-term metrics or subjective evaluations.

Important:  Since 2015 the rank is based not only on financial performance but also on the CEO’s companies’ ESG ratings.

Weighted ESG scores has accounted for 20% of each of the CEO’s ranking – and for 2019 rankings, this was increased to 30%.

As a result, Jeff Bezos of Amazon — the top CEO in the rankings since 2014 – was dropped in 2019 rankings because of the company’s low ESG scores.

ESG – Sustainability…matters!

The ESG data providers assisting the Harvard Business Review staff with rankings are Sustainalytics, now owned by Morningstar, and CSRHub.

Keep in mind well-regarded ESG / sustainability academics are part of the HBR ecosystem: George Serafeim, Robert Eccles, John Elkington, Andrew Winston, and others.

The 2019 rankings were:

#1 position, Jensen Huang of NVIDIA (classified as an IT firm, U.S.A. headquartered.
#2 – Marc Benioff, Salesforce, IT, U.S.A.
#3 – Francois-Henry Pinault, Kering, Consumer Goods, France.
#4 – Richard Templeton, Texas Instruments, IT, U.S.A.
#5 – Ignacio Galan, Iberdrola, Utilities, Spain

The story and 2019 list are available here: https://hbr.org/2019/11/the-ceo-100-2019-edition

These days we’re watching for the HBR Top 100 CEO list for 2020 – Stay Tuned!

So Where Is The Corporate Sustainability Journey a Half-Year Into the Dramatic Impacts of the Coronavirus?

August 19, 2020 — in the midst of a strange summer for all of us

by Hank Boerner – Chair & Chief Strategist – G&A Institute

The questions may be going around in your universe and the answers offered up, say, inside the corporate enterprise as the senior executives and function, business unit and other managers meet the challenges posed by the virus pandemic, related economic disruption and civil protests on a number of topics.  This is about Quo Vadis, Our Sustainability Journey!

The Conference Board is a century-old, well-regarded business organization founded by corporate CEOs who were focused on “knowledge-sharing” at the beginnings of modern corporate management theories.

Today, 1,200 companies are involved as member organizations, typically with varying managers’ participation in sections devoted to specific topics and issue areas. These include Economy, Strategy & Finance; ESG (including Corporate Citizenship and Corporate Governance); Human Capital Management (including Diversity, Equality and Inclusion) …and other focus areas that fit the functional needs of today’s companies.

At G&A Institute we closely follow the extensive research and insights regularly shared by the Board as part of its foundational mission – sharing knowledge. This week The Conference Board issued its survey results for the question(s) asked of corporate connections: “What impact, if any, do you expect the COVID-19 crisis to have on your company’s overall sustainability program?”

If we asked our corporate colleagues that question, we could expect the answers to be all over the place. The Board did ask, and the answers were “sharply divided”, staff reported.

The Conference Board conducted two different surveys — one at more than 200 companies, focused on generating responses from general counsel, corporate secretaries and investor relations execs; the other queries, at 40 companies with questions asked of dedicated sustainability executives.

Top line: Three-in-ten sustainability execs expect the current health crisis to increase emphasis on their “E” and “S” efforts – while only one-in-ten of their fellow governance execs agree with that premise.

Example: responding to whether or not COVID-19 “put general sustainability efforts on temporary hold,” only 7% of sustainability executives said yes, while 19% of legal, governance and IR folks felt that way.

The short survey results are available for you in a Top Story.

Says The Conference Board staff: “This divergence of opinions reveals companies need to reach an internal consensus on the crisis’ impact on their sustainability programs and be prepared to communicate [it] in a cohesive and consistent manner.”  Good advice!

Inside the corporate structure, people may have differing views on what is “sustainability,” what their own company’s sustainability programs are about, (Strategy? Actions? Engagements? Achievements? Third-Party Recognitions?) And senior execs may have different opinions about the real impact of the virus on the company’s operations — not all impacts are yet fully understood as the pandemic roars on around the world.

But there are positives being reported. For example, we are seeing reports every day now of increased productivity at some companies because people are at home and not wasting hours commuting.  Emails are being answered early in the morning and way after dark — increasing the firm’s communication and productivity.

What is the outside view of this, beyond the corporate sector?

While inside the corporate enterprise there may be differences of opinion on the direction of the sustainability journey, here’s some important “outside” news from Sam Meredith at CNBC: “Sustainable investment funds just surpassed US$1 trillion for the first time.”

He cited recent UBS research that the global public sector has been stepping up support for green projects. And, he cited a Morningstar report that spelled out factors contributing to the record 2Q inflows to ESG mutual funds.  Investors are putting their money where their “sustainability beliefs” may be, we could say.

Adding some intelligence to the results of our reading of The Conference Board survey results, Morningstar says: “…the disruption caused by the virus highlighted the importance of building sustainable and resilient business models based on multi-stakeholder considerations…”

Of course, there are no easy answers “inside” to harmonize the views of the executives responding to surveys about their company’s sustainability efforts.  But we can offer some advice.  Looking at the almost 2,000 corporate sustainability et al reports our team analyzed over the past year, we are seeing the formulas for success in the corporate sustainability journey.

People at the top (board room and C-suite) are the champions of the corporate sustainability efforts.  Strategy is set at the top and communicated effectively throughout the organization.  (“Strategem” is the root of the work — in ancient Greece, this was the work of the generals.  The leaders inside the company must lead the sustainability journey!)

Goals are to be set (carbon emissions reduction, increased use of renewable energy, reduction of waste to landfill, water usage and water discharge, and much more); progress is regularly measured and managed. And disclosed.

Serious attention is paid to the firm’s diversity & inclusion efforts and results; effective human capital management (HCM) is a priority at all levels, and in all geographies.

Meaningful engagements — internally and with external parties — are top priorities at multiple levels. Supply chain and sourcing efforts are monitored and bad actors and bad practices are eliminated, with management understanding that the firms in their supply network are part of their ESG footprint.

And the periodic public reporting on all of the above and more is based on the materiality of data and information — the stuff the investors want to know more about for their analysis and portfolio management.

Senior leadership understands that corporate sustainability is not about just “feeling good” but an important element of playing to win in the competition for capital and achieving industry leadership and being recognized for their efforts and accomplishments.  As Morningstar advises, sustainability is part of the business model.

So in the context of the ongoing Covid-19 crisis, the resulting economic and financial dislocations, the caring for the firm’s valuable human assets..quo vadis for your corporate sustainability journey?

Interesting conversations going on, for sure.  Read the survey results from The Conference Board survey and see what you agree/disagree.  Thanks to our colleagues at the board for all the management knowledge that they share.

Top Stories

Questions We Are Thinking About in the Midst of Major Disruption on Sustainable Investing Trends & Corporate Sustainability Journeys

by Hank Boerner – Chair & Chief Strategist – G&A Institute

As the global coronavirus pandemic continues to uproot our normal business, financial, economic and personal pursuits, questions that we could logically ask are…

(1) what impact does the virus crisis have on the ongoing corporate sustainability / ESG / citizenship efforts; and

(2) what is the investor reaction – does the move into more sustainable / ESG investment vehicles continue?

Some answers come from Sanghamitra Saha, of Zack’s, writing in Yahoo Finance – “Here’s Why ESG ETFs Are Hot Amid Pandemic”.

He begins by explaining that ESG investing has remained “hot” since the pre-outbreak period, and as Wall Street recorded its worst quarter overall since Q 2008, ESG ETFs appeared [somewhat] resilient to acute selloffs in Q1 2020. (Read, he says: “ESG ETFs Appear Unscathed by the Coronavirus Carnage”.)

These investment vehicles had US$8 billion-plus inflow in 2019, four times their total 2018 inflow. In the first three months of 2020 the flow into ESG Exchange Traded Funds was $6.7 billion — pushing total assets in such funds to $19 billion (only a bit less than the total in February 2018).

Several of these ETFs outperformed the S&P 500® and came close to the Nasdaq performance (which has been the hot place for returns in 2020, bouncing close to the 9000 mark as we write this).

What are some of the reasons for such outperformance even during the virus crisis?

The author shares perspectives from Morningstar and Bloomberg, and presents data on performance on some of the ETFs offered by Nuveen, State Street SPDRs, Vanguard, and iShares MSCI.

We’ve been seeing news and commentary about this trend since the start of the virus crisis as investors seek out what they consider to be more resilient, “safer” companies as packaged in the respective ESG ETFs.  What are public company managements doing to be part of this trend?

Mary Mazzoni, Senior Editor of Triple Pundit and Managing Editor of CR Magazine, shares news from the corporate sector in “Sustainability Isn’t Stopping:  Just Ask These Companies.”

The firms and the stories of their continuing sustainability journeys that she profiles include Bayer and Microsoft.

She begins by addressing the comments of business columnist John D. Stoll in The Wall Street Journal…that “several top companies are starting to put the brakes on their ESG programs due to economic strain…”

Pushing back in TriplePundit:  “Right now we’re all understandably consumed with the human suffering and economic strain posed by the pandemic…but we’re not convinced we’ll see a sunsetting of sustainability – and the eight corporate examples are just some of the reasons why…”

The two Top Stories present the two answers to the questions posed up top.  And throughout the collection in this week’s newsletter you’ll see other answers presented in slightly different form.

The good news from the G&A Institute offices is that our corporate clients continue with vigor and strong commitment on their respective sustainability journeys, even as operations are disrupted by the virus crisis.

Managers tell us that questions from their investors about sustainability, ESG and related issues continue to increase, and major customers continue to ask questions related to their own supply chain management.

2020 is a challenging year – and sustainable, resilient companies are stepping up to meet the challenges, setting a welcome pace.

Top Stories

Here’s Why ESG ETFs Are Hot Amid Pandemic
Source: Yahoo Finance – Environmental, social and governance (“ESG”) investing has remained a hot favorite among investors since the pre-outbreak period. Wall Street recorded the worst quarter to start 2020 since the fourth quarter of 2008. But ESG ETFs appeared somewhat resilient to acute selloffs in Q1 (read: ESG ETFs Appear Unscathed by the Coronavirus Carnage).

Sustainability Isn’t Stopping: Just Ask These Companies
Source: Triple Pundit – Over the weekend, a sustainability-focused Wall Street Journal article started making the rounds on social media. In it, business columnist John D. Stoll notes that several top companies are starting to pump the brakes on their…

And here’s some additional perspectives on the two questions to mull over:

Seven Ways To Make Business Truly Sustainable Post-COVID
Source: Forbes – We humans are a spectacularly resilient species. Wars, famines, plagues, economic crashes – we dust ourselves off and press on. So we will get beyond COVID-19. But is it too much to hope that, devastating as the virus’s effects…

Can companies still afford to care about sustainability?
Source: FT – Note — Please use the sharing tools found via the share button at the top or side of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy….

Moving The World Forward Toward a More Sustainable Future: The Member Nations of the United Nations, Working Collaboratively For Progress in the 21st Century

by Hank Boerner – Chair & Chief Strategist – G&A Institute

“The United Nations” began as a World War II-era strategy as President Franklin D. Roosevelt talked about the allies of the United States of America partnering in the fight to save democracy and collectively battling the regimes of fascist dictators in Europe and Asia.

On January 1, 1942, 26 nations “united” in Washington DC to coordinate the battle with the “Axis” powers.  (“Axis” – the axis line, said President Roosevelt, ran from Berlin (Germany) through Rome (Italy) and to Tokyo (Japan) – the clear linkage in his mind of the fascist leadership.)

In February 1942 the president addressed the nation in his 20th “fireside chat” (broadcasting nationwide on “the radio”) to talk about the progress of the war.

The U.S. was coming from far behind in terms of preparedness for a global battle, and so an important part of the progress in this, the start of the first year of U.S. involvement in the global conflict, President Roosevelt explained to the nation of 125 million souls:

“The United Nations constitutes an association of independent peoples of equal dignity and equal importance. The United Nations are dedicated to a common cause. We share equally and with equal zeal the anguish and the awful sacrifices of war. In the partnership of our common enterprise, we must share in a unified plan in which all of us must play our several parts, each of us being equally indispensable and dependent one on the other.

“We have unified command and cooperation and comradeship. We of the United Nations are agreed on certain broad principles in the kind of peace we seek. The Atlantic Charter applies not only to the parts of the world that border the Atlantic [Ocean)] but to the whole world; disarmament of aggressors, self-determination of nations and peoples, and the four freedoms – freedom of speech, freedom of religion, freedom from want, and freedom from fear.”

The leader of the free world of that era envisioned an global organization that could bring about a new world ordering, to assure greater peace and prosperity to many peoples of the world.  President Franklin Roosevelt passed away in April 1945; soon the global conflict ended; and then what he long envisioned became the possible:

On October 24, 1945, 50 nations gathered in San Francisco to sign on to the “United Nations Conference on International Organizations” – and the UN as we know it today was launched.  (We celebrate UN Day on 24 October in commemoration of that historic event.)

Today the UN has 193 members – sovereign states that have equal representation in the UN General Assembly. The UN is the world’s largest intergovernmental organization – a forum for governments, not a world government.  And within the organization are important initiatives that have been shaping corporate responsibility, corporate citizenship, sustainability, and for capital markets, as well as for sustainable investing.  These are agencies, programs, institutes, global collaborations, and other entities.

You know some of them as the UN Principles for Responsible Investing (PRI); the UN Global Compact (UNGC); the UN Sustainable Development Goals (SDGs); the work of the UN Environmental Programme (UNEP).

Today we are hearing quite a bit in the corporate sector and in the capital markets about the Universal Declaration of Human Rights (adopted 1948); the UN has been the driving force behind 80-plus “human rights laws”.  Consider:  the declaration has been translated into 380 languages to date, says the UN High Commissioner for Human Rights..

We are sharing with you three recent highlights from the UN universe.   First, an update from the UNGC CEO Lisa Kingo, stressing that now is the time for society to invest in the 1.5C future…”there never has been a time”, she points out, “like today for coming together and jumpstarting a worldwide transformation towards a more inclusive and sustainable net-zero economy.”

Also from the UNGC, news of the launch of the Ocean Stewardship 2030 Report – to be a roadmap for how ocean-related industries and policymakers can jointly secure a healthy and productive ocean by 2030.

We are now in the Decade of Action on the Global Goals (the SDGs). The UNGC is an initiative of the UN Secretary General, a call to companies everywhere to align their operations and strategies with 10 universal principles focused on human rights, labor, environment and anti-corruption.

The Global Reporting Initiative (GRI) is today an independent global foundation that was birthed by the United Nations, building on the principles advanced for corporate responsibility by the NGO Ceres (based in Boston). An organization known for a philosophy of “constant improvement”, GRI recently organized an Agriculture and Fishing Project Working Group that will lead the work to create a new sustainability standard for ag & fishing.

This is part of the work of GRI’s New Sector Program – a multi-stakeholder group will move forward the initiative to help companies with ag and fishing in their value chains promote transparency and accountability, and better understand their role in sustainable development.

It’s almost 80 years now since President Franklin Delano Roosevelt – one of the most progressive leaders in U.S. history – conceived of the “united nations”, as a necessity to bring together the resources of other nations to fight a war on all of the continents, whose outcome was then uncertain.  And then to assure the peace and work to end wars, or at least settle disputes peacefully.

In November 2010 Secretary General Ban Ki-Moon noted:  “Sadly, FDR never saw the fruits of his efforts.  He died weeks before the founding conference. Yet his vision lives on in the UN Charter’s collective commitment to peace and security, economic and social welfare, tolerance and fundamental human rights.  Franklin Roosevelt’s Four Freedoms. This legacy of multilateral cooperation guides us today…”

Well said!

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OOPS
In the June 8th issue of our newsletter (Highlights), with headline “Will We Ever See SEC Rules/Guidance for Corporate ESG Disclosure and Reporting?  The Question Hangs in the Wind..”  We incorrectly identified the corporate reporting regulations being reviewed by the Securities & Exchange Commission – should have said “Reg S-K” (not Reg F-D).  Sorry for the any confusion caused.  A more complete commentary on all of this is here on our blog.