Titles Matter to Provide Context and Direction – For Corporate Leaders and the Providers of Capital

May 14 2020

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

Shorthand terms in business and finance do matter – the “titling” of  certain developments can sum up trends we should be tuning in to.  Some examples for today: Sustainable Capitalism  – Stakeholder Primacy – Sustainable Investing – Corporate Sustainability – Corporate ESG Performance Factors – Environmental Sustainability – Corporate Citizenship…and more.

These are very relevant and important terms for our times as world leaders grapple with the impacts of the coronavirus, address climate change challenges, as well as addressing conditions of inequality, have/have not issues, questions about the directions of the capital markets, ensure issuer access to long-term capital…and more.  And, as influential leaders in the private, public and social sectors consider the way forward when the coronavirus crisis begins to wind down.

For investors and corporate sector leaders, the concept of shareholder primacy was more or less unchallenged for decades after World War II with the rise of large publicly-traded corporations – General Electric! — that dominated the business sector in the USA and set the pace other companies in the capital markets.

But as one crisis followed another – the names are familiar — Keating Five S&L scandal, Drexel Burnham Lambert and junk bonds, Tyco, Enron, WorldCom, Adelphia Cable, Arthur Andersen, the Wall Street research analysts’ debacle (Merrill Lynch et al), Lehman Bros and Bear Stearns, Turing Pharmaceutics, on to Wells Fargo, Purdue Pharma and its role in the Opiod crisis – over time, increasing numbers of investors began to seriously adjust they ways that they evaluate public companies they will provide vital capital to in both equities and fixed-income markets.

Investors today in this time of great uncertainty are focused on: which equity issue to put in portfolio that will stand the test of time; whose bonds will be “safe”, especially during times of crisis; which corporate issuer’s reputation and long-term viability is not at risk; where alpha may be presented as portfolio management practices are challenged by macro-events.

This is about where the money will be “safer” overall, and provide future value and opportunity for the providers of capital – because there is great leadership in the board room and executive offices and resilience in crisis is being demonstrated.

As we think about this, the questions posed in context (virus crisis all around) are:  Why has sustainable investing gone mainstream?  What can savvy boards and C-Suite leaders do to exert leadership in corporate sustainability?  Where is sustainable capitalism headed?  How do we identify great leadership in the corporate sector in times of crisis?

Our choice of featured stories up top for you this week provide some interesting perspectives on these questions.

And, we’ve tried to illustrate the embrace of sustainability as a fundamental organizing principle today of great corporate leaders.  As well as explaining the continuing embrace of sustainable investing approaches of key providers of capital as a strategic risk management discipline — and proof of concept of acceptance of stakeholder primacy / sustainable capitalism in the 21st Century.

The other stories we’ve curated for you this issue of our newsletter help to broaden these perspectives that are offered up in these challenging times from thought leaders.

As the ancient blessing/curse goes:  May we live in interesting times.

Featured Stories – The Two Critical Halves of Sustainable Capitalism, Issuers and Providers of Capital…

Concept: A well-structured sustainability committee not only serves a critical coordinating function, but also steers sustainability right to the heart of the company and the company’s strategy. Let’s take a look at how boards at some of the world’s leading companies have tackled this…

How Can Boards Successfully Guide a Transition to Sustainable Business?
Source: Sustainable Brands – The UN’s Sustainable Development Goals are set to unlock $12 trillion in new business opportunities by 2030. Yet many companies are still stuck in the past. Over the next decade, businesses can either adapt and thrive or deny and, says the organization…

The evidence suggesting that boardrooms should prioritize sustainability is growing rapidly. On the one hand, there are increased risks associated with not prioritizing sustainability. On the other hand, the figures show the huge opportunities sustainability offers businesses. As a result, more and more, sustainability is positioned at the top of boards’ agendas.

Boards must put sustainability at the top of their agenda to thrive
Source: GreenBiz – Amidst the global COVID-19 crisis, there have also been glimmers of hope. A significant one is its impact on climate change. It’s estimated that global carbon emissions from the fossil fuel industry could fall by 2.5 billion…

During a recent CECP CEO Roundtable, current and former CEOs gathered virtually and shared insights from their perspectives on the business landscape. In these informative discussions, one executive noted that leadership, more so than having the right systems in place, is and will be integral as we navigate uncharted territory:

Pivoting with Moral Leadership
Source: CECP – During a recent CECP CEO Roundtable, current and former CEOs gathered virtually and shared insights from their perspectives on the business landscape. In these informative discussions, one executive noted that leadership, more so…

Bears watching:  On 8 April 2020 the European Commission published a consultation paper on its renewed sustainable finance strategy (the “Sustainability Strategy”). The Sustainability Strategy is a policy framework forming a key part of the European Green Deal, the EU’s roadmap to making the EU’s economy sustainable, including reducing net greenhouse gas emission to zero by 2050. Despite the inevitable recent shift of focus to measures dealing with the COVID-19 crisis, this remains a top EU priority and the outcome of this consultation may significantly affect :

European Commission Consultation on the Renewed Sustainable Finance Strategy
Source: National Law Review – The Sustainability Strategy is a policy framework forming a key part of the European Green Deal, the EU’s roadmap to making the EU’s economy sustainable, including reducing net greenhouse gas emission to zero by 2050. Despite the…

Why the Olive Tree and Sustainability?

by Ken Cynar — Editor, G&A Institute’s “Accountability Central” and “Sustainability HQ” web platforms and the weekly Sustainability Highlights newsletter

As a viewer of our public information-sharing websites and our weekly Sustainability Highlights newsletter you may have noticed that we frequently use the picture of an aged olive tree to illustrate certain stories about sustainability. What is the connection? And why this olive tree?

The tree is a powerful symbol. The olive tree grows naturally throughout the Mediterranean region and also in Asia and Africa, but has been cultivated in other parts of the world. Thousands of acres can be seen throughout Italy and Spain, the Middle East and parts of North Africa.

The tree grows slowly and steadily in marginal climate and soil conditions utilizing just the water it needs without sapping all the minerals from the soil. ”Olive trees show a marked preference for calcareous soils, flourishing best on limestone slopes and crags, and coastal climate conditions. They grow in any light soil, even on clay if well drained, but in rich soils, they are predisposed to disease and produce poorer oil than in poorer soil.”

Their existence is mentioned in both the Old and New testaments of the Bible, as well as in Greek and Roman literature. The trees are noted for their longevity with frequent examples dating back from 1,000 to almost 2,000 years. It is these qualities that make them an excellent illustration for today’s focus on societal sustainability.

Why this particular olive tree? This tree is situated in the Valley of the Temples in Agrigento, Sicily, just about two hundred meters from the Temple of Hercules, the oldest temple on the site. Here stood the city of Akragas, one of the most important Greek colonies in Sicily, founded around 582 BC by settlers from nearby Gela and from Rhodes.

 

Olive trees dot the old city with this particular one purported to be nearly 2,000 years old. Very few things on earth can boast of being that old, weathering climate changes, wars, famine, plague, etc. I took this picture because of its location and stately appearance and the guide’s assurance of the aged tree. We all know guides do not lie, right?

So here we have it. The olive tree is known for its toughness, measured growth, economy of scale and longevity, even facing myriad natural and man-made challenges.

Aren’t these the qualities of a sustainable company?

And here (photo) is this particular tree. Occupying a site that goes back to a city founded 2,500 years ago. Its roots are deep into the history of civilization, the time of the Romans and the Greeks. In fact, historians have verified that this site has been occupied by human civilization for more than 7,000 years and even then olive trees grew in this Valley.

This illustration was not selected by chance, but with deep respect and a measured recognition of its history and stature and powerful symbolism of the ancient olive tree in the 21st Century society.

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Ken Cynar is Editor-in-Chief of Governance & Accountability Institute, and manages its public-sharing web sites, Accountability Central and SustainabilityHQ. He is editor of the firm’s weekly newsletter – Sustainability Highlights – reaching almost 15,000 professionals interested in sustainability topics and issues.

The quote is from Israel, posted by Alexandra Ben-Abba, from Outer Seed Shadow.

State of Corporate Sustainability, GreenBiz Releases Latest Update — Top Lines: (1) We are making progress and (2) There are still challenges

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

It’s now three-quarters of the way through the year 2018 – what is the state of the Sustainability Profession?  John Davies, writing in GreenBiz (he’s VP & Senior Analyst), shares some interesting highlights gained through the firm’s recent report with us this week.

Among the major themes:  (1) Companies large and small see advances – progress – more companies are communicating what they are doing.  (2) Serious concerns, challenges, barriers are still ahead (look at what is happening to the US SEC and the dismissal of sound science by policymakers).

The Greenbiz report on the state of the profession is always eagerly awaited (every-other-year) and the latest (the 2018 report) is available for you (the link is in the Top Story).

GreenBiz presented results of its research on such items as gender pay equity trends; the embedding of the sustainability role(s) throughout the organization; more professionals coming in to the firm from outside vs. being promoted from within; and, the corporate sustainability programs becoming more sustainable.

There is also an interesting collection of news items we’ve selected for you that describes the range of activities within industries as companies of all sizes as the “corporate sustainability wave” gains momentum.  It’s below the Top Story for you.

This Week’s Top Story

The State of the Sustainability Profession, 2018
(Tuesday – September 25, 2018) Source: GreenBiz – That’s a significant change from 2011, when the Governance & Accountability Institute found just under 20 percent of S&P 500 companies were publishing such reports.

And we call your attention to:
Sustainable Brands Delivers Insight on How to Build Better Sustainability Metrics
(Friday – September 28, 2018) Source: Sustainable Brands – Sustainable Brands® reveals program, networking and activity highlights for its upcoming conference: New Metrics 2018. Nearly 400 business executives will convene October 29-31 at the Loews…