This season on the Refinitiv Sustainability Perspectives Podcast, our host Keesa Schreane spoke with innovative business leaders from a range of diverse industries to explore the role of ESG in modern organizations today – and we’re inviting our readers to take a listen.
- Once considered off-market externalities, factors such as climate change and inequality have transformed into market issues. And more than ever, clients want to see their money invested responsibly.
- Focusing on diversity and inclusion can increase earnings. Clients must focus on giving their business to firms that master diversity to bring up the next level of competition.
- The world must invest $4.5 trillion per year to reach the UN’s Sustainable Development Goals (SDGs). And, the private sector has the power to help meet them, if money is channelled correctly.
- To succeed in today’s business climate, sustainable companies must focus on a larger set of stakeholders – including employees, customers, suppliers and communities.
- Climate change is affecting portfolio performance; in fact, investing in it can drive significant alpha.
- Africa holds 6 of the world’s 10 fastest growing economies. There is a great opportunity for investors here, especially those interested in building products and services focused on Sustainability.
Do you want to learn more about sustainable finance and responsible business? Are you focused on integrating ESG investing into your strategy? Our Refinitiv Sustainability Perspectives Podcast is designed to help you reach your goals.
Since September, our host Keesa Schreane has spoken to leaders across a range of industries to explore how responsible leadership and innovation can help lead to better business decisions.
We’ve learned about establishing sustainable leadership in Africa and how to reach the UN’s Sustainable Development Goals. Guests have shared insight into the green economy, carbon finance and the importance of impact investing. And, it’s all been with the goal of keeping you up to date about the most important sustainable investing trends around the world.
Want a recap? Here are 6 key takeaways from season one:
1.The investment landscape is changing – and people want to see their money managed more responsibly
The first episode of the Refinitiv Sustainability Perspectives Podcast began with a clear message from our guest Nikita Singal, the Co-Head of Sustainable Investment & ESG at Lazard Asset Management.
Nikita argued that financial institutions absolutely need to be incorporating ESG investing into their business processes. She told us about why this really matters – especially for clients at her firm, which manages more than $200 billion USD.
“We are managing the money of endowments, of schools and foundations. We are managing the money of families who are looking to preserve inter-generational wealth. And so our responsibility is to really be good long term stewards of that capital,” she said. “These people, these individuals, their needs are changing and evolving. As society evolves, it is our responsibility as investors to take that into consideration.”
Singhal also adds that issues once considered off-market externalities – like climate change or rising inequality – have now morphed into financial issues. Those not thinking about the risks of climate change and aren’t doing their jobs are investors.
But, it’s also important to remember: when evaluating a company’s ESG performance, try not to get stuck on how the company has done in the past. Instead, investors should constantly be reevaluating. “How is this company dealing with the most important issues that we are facing it today?” asks Singhal. These issues could very well change three quarters from now.
2. Supporting diversity and inclusion leads to profit
McKissack & McKissack is the product of the oldest African-American owned construction company in the US; in fact, its roots date back to before the Civil War. And, for our second episode, we were lucky to speak with President and CEO Cheryl McKissack about the firm’s history and success.
The company’s story began when Moses McKissack came to the US as a slave in 1890. He learned to build from his overseer – and passed down the building trade to his grandsons, who opened the first McKissack & McKissack in 1905. Cheryl McKissack is the fifth generation in her family to work in the building industry.
We talked about green building and governance in family-run businesses. She also told us why firms need to push for diversity and inclusion.
“Our country is built on entrepreneurship and capitalism,” said McKissack. “The minute that capitalists understand that they are going to increase their profits by diversity, they jump on it. And the reason this is happening is because now you’re getting more creative ideas from people that have a different perspective.”
“We’re seeing women in the construction industry tearing it up because they are so attentive to detail and they are finding faster, better ways to progress things.”
Still McKissack said, there is still a huge gap. She noted that in New York State, black women-owned businesses account for just two percent of the construction industry. “We need to bring up the next level of firms to make sure that we expand the pool, and that creates competition.” she said.
This means not going back to the same construction firms over and over again, but rather, giving your business to those that master diversity.
Learn more about the key diversity trends across different industries and regions in the Refinitiv Diversity & Inclusion (D&I) report.
3. The public sector can’t meet the UN’s Sustainable Development Goals alone – the private sector needs to step in to finance it
Can investors help reach the UN’s Sustainable Development Goals (SDGs)? According to Julia Walker — the Head of Market Development, Risk at Refinitiv — they absolutely can.
We had the pleasure of speaking with her on the podcast this October about the role investors can play in combating some of the largest global challenges, including poverty, hunger and gender equality.
Walker noted that we have enough money to achieve the SDGs (4.5 trillion per year). However, no countries have been able to reach them. It’s not for lack of money, said Walker, but rather how we channel the money we have.
“The key message is that the public sector can’t do it alone. It will be the private sector coming in to finance them,” she said. Walker notes this could mean private companies financing large infrastructure projects in an attempt to push the SDGs forward, or investing in technology solving real global problems – such as fintech platforms made for the unbanked.
To read more about sustainable finance, sustainable goals and how businesses and governments can work together to meet the SDGs, get your hands on Walker’s new book: Sustainable Development Goals: Harnessing Business to Achieve the SDGs through Finance, Technology and Law Reform.
4. A sustainable business must focus on a broader set of stakeholders
Society is changing, and business people need to think about what communities expect of their companies going forward. That’s according to Dan Esty, a Professor of Environmental Law & Policy at Yale University and author & editor of 12 books on sustainability. We had a great talk with Etsy on episode four of our podcast about a range of topics, but we concentrated especially on how companies have transformed to focus ESG.
He noted that recently, we’ve seen many organizations – including the Business Roundtable – change their minds on what the mission of a company should be.
“For the longest time a lot of business leaders…would have said that the key to a business is delivering shareholder value,” said Etsy.
But now, sustainable businesses are focusing on a broader set of stakeholders. “Their employees, their customers, their suppliers, their communities all need to be in the equation. I think that requires a bit more effort. And it’s going to, in the long term, be better for society.”
However, he added that businesses also need a clear set of guidelines on ESG metrics and how to meet environmental regulations – following the example of Financial Accounting Standards Board (FASB)’s regulations.
“We need something similar in the arena of sustainability so that we get everybody on the same page – and there can be real comparability across companies,” said Etsy.
But until then, what can companies do now to stand out in the ESG space and the market overall? Focus on innovation.
“Frankly, the companies that are driving innovation around sustainability will have huge market opportunities,” said Etsy. “It’s the people that engage the public on sustainability, that provide ways to market through sustainability, that think about sustainability as a way to get partnerships going with the environmental community. These are the folks you need to watch.”
5. Investing in combating climate change drives alpha
Decarbonization and climate change is impacting how investors manage their portfolios today – and according to Bridget Realmuto LaPerla, it’s definitely for the better. Realmuto LaPerla is Head of ESG Research at State Street Associates and co-author of Decarbonization Factors, a study by her firm and Harvard Business School.
She joined us in the studio last month to speak about climate finance. If you’re an investor, it’s certainly an episode you don’t want to miss.
“There’s an increased number of investors who see climate change as an economically significant event, not just in the long term but affecting portfolio performance now,” said Realmuto LaPerla. “Investors need to pay attention to climate change in their strategies: it can drive alpha.”
But according to Realmuto LaPerla’s study, not every climate strategy is created equal. The most aggressive carbon strategies delivered the strongest alpha over time. This is particularly true in Europe, which is more regulatory-driven than the US. So for investors in the European market, allocating funds to the lowest carbon firms (as opposed to entire industries, for example) is their best bet for an excellent return.
To read more about Realmuto LaPerla’s study and climate finance check out our latest blog post: From risk to alpha: why investors focus on decarbonization investment strategies
6. Sustainable business is growing in Africa, which is an opportunity for investors
Our final episode of the season featured Jackie Cureton and Saidah Nash Carter – two principals at Bright Insights Global (BIG), a women-owned consultancy based in Cape Town. They shared with us their insight surrounding sustainability in Africa and investment opportunities in the continent.
Hint: there’s plenty. Africa boasts 6 of the world’s 10 fastest growing economies.
When Nash Carter first began working in the region, she told us she saw an amazing opportunity for business in Africa – and to build products, solutions and services that focused on sustainability. “Not only from an environmental impact perspective, but also thinking about them in terms of business models, through this lens of…the UN Sustainable Development Goals.”
But for global organizations interested in investing in Africa, it’s important to focus on building a culture that’s not just important for the business – but also for society, said Cureton. “It’s about valuing the talent that is there, and tapping into that [to] grow it.”
Listen to season one of podcast now
Learn more about impact investing and the most important ESG trends around the world by listening to the Season One Wrap-up Episode today.
