Monthly Archives: February 2019

Millennials Really Do Want To Work for Environmentally-Sustainable Companies, According to a New Survey of Large Company Employees

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

Here we are in the new millennium, since 2000 or 2001 (the clear delineation of the century-break 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).

The Millennial Generation has been defined by the U.S. Census Bureau as those men and women born between 1981 and 1996, who are 23-to-38 years of age in 2019. (For sure, the exact definitions of recent generations are not always in general agreement.)

This cohort succeeded the smaller-sized “Generation Xers” and the larger Baby Boom generation (born 1946-1964, originally 77 million strong and two-thirds larger than the “Silents” before them).  The long-dominant Boomer population has been decreasing in total size since 2012…so what comes next for the business sector and the financial sector?

Answer:  Millennials! – and then over time the Post-Millennials, those born 1997-to-the-present day. But today’s focus is on the many impacts, strong and subtle, of the Millennials.

The Pew Research Center sees some of the defining trends for the Millennials as including experiencing the September 11, 2001 terrorist attacks and the aftermath (shes off at the airport screening); the 2008 financial crisis and the impacts of the Great Recession that followed; steadily escalating costs for higher education and healthcare and housing…and other factors that created “slow starts” for their careers and “that will be a factor for American society for decades to come.”

This is also the generation that grew up surrounded with technology and for some, the experience of transition from land-line phones to early cell phones and then on to sophisticated iPhones; and for most, the internet, the World Wide Web, and social media became the center of life, observes the Pew researchers.

So what should business leaders expect as this maturing generation – in terms of attractive to potential job applicants and for retention of Millennials already under the roof?

Fast Company, the go-to magazine for many in the generation, says corporate sustainability is a priority and most Millennials would actually take a pay cut to work at an environmentally-responsible company; 40 percent have already done so because “company sustainability”. That is higher than the answers of respondents of prior generations (below 25% for Gen Xers and 17% for parents and grandparents in the post-WW II Boomer crowd).

Millennial survey respondents (40%) said they have chosen a job because the company performed better on sustainability than other choices…something only 17% of Boomers said they had done.  As for employee retention, consider that 70% of Millennials said they would stay with a company if it had a strong sustainability plan.

Are these survey results a “blip”?  Fast Company [magazine] tells us that in 2016 a similar survey reported that 64% of Millennials said they would not take a job at a company that was not “socially responsible” — and 75% said they would take a smaller salary to work at a company more in line with their “values”.

The 2019 survey was based on conversations with 1,000 employees at large U.S. companies.  More than 70% of respondents said they would choose to work at a company with a strong environmental agenda, and a sizable number said they would take a pay cut to do so.

Today’s business leaders need to keep these attitudes in mind as this significant demographic shift is taking place.  As the huge generation of Baby Boomers continue to age out of the workplace (the oldest are 73 years of age, the youngest are now 55),

Transition:  Millennials will make up three-out-of-every-four workers in the next six years, staff writer Adele Peters tells readers.(And the Census Bureau says they are one-out-of-four of the total US population today.)

The survey was commissioned by the blockchain-based clean energy platform Swytch – another sign of the times; this is a new platform organized to track and verify the impact of sustainability efforts and action on the global level of C02 emissions using blockchain technology.

The company says that consumers reducing their energy use can win tokens.  Is this 21st Century approach to currency exchange a “blip”? Perhaps not – JPMorgan Chase recently announced its own crypto-currency and as we write this, Bitcoin values are at $4,000.

Says Swytch co-founder Evan Caron of the survey:  “From my perspective, it’s a competitive advantage for large enterprises to really align themselves with employees’ ideas about creating more environmentally-sustainable choices.”

This Week’s Top Story

Most millennials would take a pay cut to work at a environmentally responsible company
(Friday – February 15, 2019) Source: Fast Company – Nearly 40% of millennials have chosen a job because of company sustainability. Less than a quarter of gen X respondents said the same, and 17% of baby boomers.

Question for Corporate Leaders: Is Your Company’s Sustainability Journey Based on Key Strategies? Is There Clear Alignment of Foundational Strategies with Sustainability?

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

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 the more modern “stratagem”) mean “the work of the generals, or generalship” which is to clearly say:  to lead from the front..or the top!

In 2019, “strategy” and “sustainability” should be clearly linked, right?  In the corporate sector, setting strategies is at the heart of the work of the men and women at the top, in the board room and in the C-suite.  So what does that mean to us in terms of the intensive focus today on corporate sustainability and ESG performance? (And, the impacts positive and negative in the capital markets?)

The corporate enterprise that is seeking to excel among its peers, and clearly demonstrates leadership in sustainability matters (that encompasses a broadening range of ESG issues today) surely has the leaders at the top crafting, innovating and sharpening the leadership strategy…and driving the foundational elements down into the depth and breadth of the enterprise.  Typically, universal understanding helps to drive competitive advantage and creates a moat more difficult for peers to cross.

And so in this context, what about the “corporate sustainability laggards”?  Often in our ongoing conversations with a wide range of corporate managers – and with investment managers evaluating corporate ESG performance – the companies not yet well along in the journey or perhaps not even started on the journey, lack of sustainability strategy sends a signal of “silence” from the top ranks.

What this says to stakeholders:  ESG and strategy = not connected yet, there is a lack of quality in our management and board.  Don’t look to our firm for signals of sustainability leadership.

We find that most large-caps “get it” and it is the resource-challenged small-cap and mid-cap firms that are not yet started or not far into the sustainability journey.

The topic of corporate sustainability strategy gets a good overview in the pages of the Harvard Business Review by the outstanding ESG / sustainability experts, George Serafeim and Ioannis Ioannou.  Their post is based on their new 45-page paper (“Corporate Sustainability: A Strategy?”) and their co-authored HBR management brief is the topic of our Top Story for you.

They recently published the paper using data from MSCI ESG Ratings for 2012-to-2017 (looking at 3,802 companies); among the approaches was to separate “common practices” (across many companies) and “strategic” (those not so common to most companies).

Your key takeaway from their work:  “Our exploratory results confirm that the adoption of strategic sustainability practices is significantly and positively associated with both return on capital and market valuation multiples, even after accounting for the focal firm’s past financial performance.”

And…”the adoption of common sustainability practices is not associated with return-on-capital, but is positively associated with market valuation multiples.” There’s more for your reading in the Top Story below.

You could share these findings upward in your organization if your firm’s executives are not quite tuned in yet to the importance of having a clear strategy that factors ESG factors and sustainability into account.

Notes:  George Serafeim is Professor of Business Administration at Harvard B-School and Ioannis Ioannou is Associate Professor of Strategy and Entrepreneurship at London Business School.  They frequently collaborate and both write extensively on topics related to corporate sustainability and sustainable investment. And both are frequent speakers and panelists at trade and industry conferences and workshops.

This Week’s Top Story

Yes, Sustainability Can Be a Strategy
(February 11, 2019) Source: Harvard Business Review – In recent years, a growing number of companies around the world have voluntarily adopted and implemented a broad range of sustainability practices. The accelerating rate of adoption of these practices has also provoked a debate about the nature of sustainability and its long-term implications for organizations. Is the adoption of sustainability practices a form of strategic differentiation that can lead to superior financial performance?

Or, is it a strategic necessity that can ensure corporate survival but not necessarily outperformance?

The Ethical and Sustainable Supply Chain – Some Thoughts on This For You From Forbes

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

“Ethical sourcing” — we see that term used a lot by companies that 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, to be found in the layers-upon-layers of suppliers in the usual  corporate globalized sourcing effort?  How do we define this?

As we sometimes hear in the poetic notion, little things can have substantial impact; think of the the butterfly wings’ flapping and fluttering in Brazil that can have effects all the way north as expressed through the hurricane winds hitting Mexico and in the tornado whirlings on the American Gulf coast.

This “butterfly effect” (part of the chaos theory portfolio) has counterparts in the supply chains of companies sourcing from near and far lands.

An example shared:  Poor working conditions in the Bangladesh factories have been brought to consumer attention by United Kingdom news reports; the Asian-produced goods (such as T-shirts) end up on retailer shelves with “Spice Girl” branding.  Irony:  the shirts were part of the Comic Relief Event campaign staged to raise money for “gender justice” – and the Bangladesh female workers made 30 cents an hour under hostile working conditions (details are in our Top Story).

Writing for Forbes (brands), contributor Richard Howell’s shares his thoughts in our Top Story.  “Social, economic and environmental sustainability should be at the heart of every supply chain…” he writes.

He posits that consumers are looking to buy from companies that have a preferable design, sourcing, manufacturing, delivery of goods & services…and that operate assets and equipment in an energy-efficient, safe environment (for team members and the environment).  Howell spells these out in his commentary.

So – what is ethical?  Among other things, fair wages, better working conditions and gender equality in the global supply chain that is sustainable as well.

This week’s Forbes commentary is by contributor Richard Howells, a 25-year veteran of supply chain management and manufacturing who describes himself as “responsible for driving market direction and positioning of SAP’s Supply Chain Management and IOT solutions.”  He’s worked on systems for such brand-facing companies as Nestle, Gillette, and others.

This Week’s Top Story

Tell Me What You Want, What You Really, Really Want: A Sustainable Supply Chain
(Thursday – January 31, 2019) Source: Forbes – Social, economic, and environmental sustainability should be at the heart of every supply chain

Davos 2019: The Conversation in Switzerland Ripples Out to The Rest of the World – News, Commentaries, Reports, Initiatives, For Your Consideration

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

Davos, Switzerland –  January 2019: The Conversation in Switzerland Ripples Out to The Rest of the World – News, Commentaries, Reports, Initiatives, For Your Consideration

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

The world leadership gathering in Switzerland in winter every year – we see this in the “Davos meetings” in the news report datelines – are part of the World Economic Forum’s (WEF) broad thought leadership activities.  This gathering is the WEF’s annual meeting (there are regional meetings as well).

Heads of state, CEOs, invited societal thought leaders, leading academics and journalists, politicians of all persuasions, NGOs, heads of multilateral heads (Christina Lagarde, International Monetary Fund)…they were all gathered there again this year.

WEF bills itself as “the international organization for public-private cooperation”; it was created in 1971 as a not-for-profit, to operate in a non-partisan, independent forum for leaders of society.  The annual meeting provides the opportunity for sharing ideas on a wide range of issues and topics. And then the broadcast of these out to the world.
This year, the broad themes of discussion included “4th Industrial Revolution”, “Geostrategy”, “Environment”, and “Economics”.

“Shaping” (taking actions as private-public partnerships) was the theme of numerous initiatives such as “Shaping The Future of Environment and Natural Resource Security”.

A slew of reports are typically issued each year; in 2019 one was “Seeking a Return on ESG: Advancing the Reporting Ecosystem to Unlock Impact for Business and Society”.

These reports and other information are available for you on-line at: https://www.weforum.org/agenda

Naturally, with the wise men and women of our global society gathered in the snowy reaches of Davos and presenting their views over several days, there was the usual flow of headlines and news stories out to the rest of the world.

Our team, led by Editor-in-Chief Ken Cynar closely monitors the Davos and other WEF meetings (the annual and regionals) to bring you relevant highlights. This week after the conference wrapped up, Ken Cynar selected this week’s Top Story pick.

That selection presents the comments of Hans Vestburg, CEO, Verizon Communications, on the theme of The Fourth Industrial Revolution and a Sustainable Earth.  CEO Vestburg (he’s originally from “high latitudes” Sweden and became CEO in August 2018) is strategically positioning his giant telecomm enterprise to balance market leadership, promising advances in technology (such as 5G networks) and challenges presented by climate change, population growth — and helping society achieve a sustainable and equitable future.

Hans Vestburg said at Davos: “Perhaps it because of my roots in a land so beautiful (Sweden) and yet so vulnerable…I’ve long had an interest in the potential link between technological advancement and environmental sustainability.”  CEO Vestberg helped to lead the U.N. Sustainable Development Solutions Network, as example.

He sees the coming generation of high speed, highly-interactive technologies as a possible resource to help society buy time against catastrophic worldwide climate change (think of 3D printing, 5G networks, the Internet of Things, 4IR networks, autonomous devices).

Consider this, said the CEO of Verizon to the Davos leadership gathering:  “If we and our partners throughout industry, government and academia can collaborate imaginatively on way to maximize the sustainability benefits of these emergent technologies from the very start, the next few crucial decades could see cascading gains in momentum against both materials wastage and emissions.”

We think you’ll find his comments intriguing – and most welcome from the CEO of a prominent U.S. corporation with commitment to address critical issues related to climate change, and willing to speak up!

This Week’s Top Story

Want a Sustainable Earth? Bring on the Fourth Industrial Revolution
(Wednesday – January 23, 2019) Source: World Economic Forum – When I became CEO of Verizon back in August, one of my commitments was to accelerate our company’s progress in Fourth Industrial Revolution (4IR) technologies, drawing upon our longstanding role as a world leading…