What do the Rana Plaza clothing factory disaster and the Chinese food safety scandal that, according to Reuters, caused a 4.2 percent share price decrease for Yum Brands have on common? They are two of the many examples of the costs and risks that companies can incur when a sustainable and integrated supply chain management is not in place. On the other hand, responsible management comes with many benefits, including greater access to capital and new markets, reducing the cost of material input, energy and transportation, and spurring innovation in order to meet evolving customer and business partner requirements. The business case is clear.
At the 2017 World Economic Forum in Davos, a brand new platform was launched with the aim to achieve healthy, enjoyable diets for all, that are produced responsibly within planetary boundaries. A total of 25 global companies such as Givaudan, Solvay, Unilever and FrieslandCampina joined together to launch FReSH (the Food Reform for Sustainability and Health program) under the leadership of the World Business Council for Sustainable Development (WBCSD) and the EAT Foundation.
The UN Sustainable Development Goals (SDGs) have been able to catch responsible investors’ attention all around the globe since they were adopted in September 2015. One year down the road, a coalition of investors, including the managers of more than €550bn in Dutch pension assets, publicly committed to integrate SDGs within their investment strategy. Although the coalition is a Dutch and Swedish affair for now, the intention and hope is that other institutional investors will come on board.
As part of their round-the-world sailing trip in search of sustainable solutions, the Sailors for Sustainability visited Copenhagen last summer. The Danish capital has set the ambitious target of becoming CO2-neutral by 2025. This innovative policy objective makes Copenhagen the world’s leading capital city on climate change. Transformations in the construction, transportation and energy sectors will be required, which will not only have positive effects on the environment, but also create business opportunities.
With an estimated value of €51 billion and an annual production volume of 380 million hectoliters in Europe alone, creating value for business and simultaneously creating a more sustainable path to economic growth, prosperity, and people’s well-being is key in the global beer industry. Today, the industry faces challenges as population growth, changing consumer preferences, climate change, and demographic shifts. Therefore, the integration of the Sustainable Development Goals into companies’ core business is fundamental for future success.
The valuation impact of sustainability can be very high. ESG based value driver analysis led to a target price impact of -19% at Anglo American and +23% at Chr. Hansen. However, when talking to Investor Relations executives and Board members of listed companies, a frequently heard statement is “Why bother, our investors are not interested in sustainability”. This claim is sourced from the observation that there are few questions in shareholders meetings and earnings calls that address the topic. But how is that possible with the level of assets under management of ESG integrated funds rising beyond €6 trillion in Europe alone?
Plastics have become one of the omnipresent materials in today’s economy. Its usage has skyrocketed in the past half-century, and is predicted to double again in the upcoming two decades. While plastics, and particularly plastic packaging, can have a prominent role in a more sustainable society by increasing efficiency, the current plastics economy has important drawbacks. The Ellen MacArthur Foundation has therefore launched the ‘New Plastics Economy’ initiative to turn these drawbacks into opportunities – in alignment with the principles of the circular economy.
Larry Fink’s latest annual Corporate Governance letter to CEOs recently made its way into headlines as the BlackRock chairman expressed a noteworthy appeal for companies to stop giving quarterly earnings-per-share guidance. In a wider perspective, Fink urges companies to resist the “powerful forces” of short-termism, and invest in long-term growth instead.