Sustainability in the workplace

Sustainability in the workplace

As we look towards the future, megatrends such as the transition to the circular economy and the zero-waste movement promise to shape the sustainable workplaces of tomorrow. The disruptions of the early 2020s have already begun to catalyze profound changes in our daily lives. Not only do people want to see action on sustainability, but employees are also demanding that their companies change so that they are aligned with their values. 

If you’re starting sustainability in the workplace program from ground zero, you’ll need to justify your time and resources. Sustainability in the workplace can include the environment, economic or health and community sustainability. However, companies often categorize sustainability into three pillars: Environment, Social, and Economic. 

There are many reasons why you should invest in sustainability. First of all, energy-efficient workspaces are typically cheaper to operate, so there’s a potential for savings on utilities and maintenance. It will also help the environment and, your employees will benefit from healthier and safer working conditions. Lastly, having a sustainable workplace prove a company’s commitment to sustainability, which can be a powerful branding and marketing tool.

According to Unily 2020 Census, designed to uncover how employees feel about sustainability in the workplace, the following data arrived. The results underscored the need for change, with 83% of respondents believing that their company isn’t doing enough to tackle sustainability issues. 

How can your company bring sustainability to the workplace?

You don’t have to search too hard to find a company flexing its green credentials. There are startups like co-working company Upflex, which plants a tree for every booking it receives.

A company’s carbon footprint includes its employees’ emissions from commuting. During a pandemic, many companies were forced to work from due to safety measures. However, that can be something your company can do in the future. Employees should be allowed to work from home on green days and set up interoffice meetings using videoconferencing. 

Your business is part of various supply chains that should be audited for environmental impact. Engage with cafeteria food-service vendors that offer compostable packaging and plenty of meat-free options.

The need for increased hygiene means, unfortunately, the need for more disposables and more individual packaging, and in the workplace, this has manifested particularly at mealtimes. Food delivery or takeaway options help to keep employees safe as that they do not have to risk leaving the office to eat, but the amount of single-use food packaging has skyrocketed as a result. For a start, companies with larger offices can consider catering services rather than allowing employees to expense on-demand food delivery.

The aim of a post-COVID world has to be to bring order to the chaos and take away the headache from businesses that are faced with the challenge of a rapid and unplanned shift to remote working.

Moreover, emphasis should be on the refurbishment and reuse of IT equipment to reduce the e-waste by adopting sustainable technology lifecycle management.

“We must emerge from this health and economic crisis with a newfound pace and ambition for addressing the climate emergency,” said Patrick Flynn, Vice President at Salesforce.

That said, COVID-19 presents an additional incentive for companies to consider the sustainability of their workplace and look for improvements that will benefit the company and their employees. 

Sustainable Investing for 2021

Sustainable Investing for 2021

What will 2021 bring for sustainable investing? More companies will feel pressure for ESG disclosures from investors, regulators and employees. Moreover, Millennials will continue looking for sustainable companies and supporting their agenda.  Millennials consistently show a tendency to crave social responsibility, whether it’s in the products they purchase, the organizations they work for, or their investment portfolios. In 2021 be sure to prepare for any ESG requests, as the new regulations have become mandatory in some countries.

Did you know that Task Force on Climate-related Financial Disclosures (TCFD) reporting became mandatory for UN PRI signatories in 2020 and is set to become required over the next few years in the U.K., New Zealand and perhaps even the U.S.? European Union’s Sustainable Finance Disclosure Regulation (SFDR), if finalized in its current form, will require investment institutions holding your shares to report on whether your company operates in or around areas of high biodiversity value.

If you haven’t already, you will be hearing from investors about the many disclosures you are missing. Those could include carbon emissions or revenues from EU Taxonomy green activities.

Furthermore, we at VentureXchange as financial advisors are here to help your company with ESG reporting and sustainability strategy. Nevertheless, your company action is important but there are limits to what individual firms can do to address the underlying root causes of non-sustainability.

Social, Sustainability and Green Bond Issuances 2015-2020 (USD)

Social, Sustainability and Green Bond Issuances 2015-2020 (USD)
Source: Climate Bonds Initiative, MSCI ESG Research.

Two social bonds issued this year by Bank of America provide a good illustration of the range of purposes these issuances aim to serve. One intended to provide financing to the healthcare industry, while the other aimed at reducing racial inequality through a comprehensive program of lending to underserved groups.

Pfizer, too, issued a social bond for healthcare purposes, but its use of proceeds explicitly includes vaccine production in low and middle-income countries. Addressing global health emergencies and helping fund the development of its COVID-19 vaccine. A key challenge for investors lies in the tension between a desire for certainty that an investment will have the desired social outcome and the need to try new things in the time before definitions and assessment criteria developed.

In 2021 sustainable investing, will stay in the focus for many investors and companies. However, the lack of standards in a fast-growing area means that a few bumps in the road are inevitable. But the lessons learned by companies and investors willing to forge ahead could lay the foundations for others as they innovate scalable investable solutions.

According to Investopedia, a growing number of investors are placing billions of dollars into socially responsible impact investing funds, which are also known as Environmental, Social, and Governance (ESG) funds. These portfolios select stocks based on a company’s ESG practices, along with more traditional financial measures. Sustainable investing in 2021 is focused to maintain sensitivity to environmental, social, and governance (ESG) factors. Take a look at the top of the best bond ETFs that emphasize social responsibility.

Sustainable investing – long term thinking

The sustainability mindset is something most investors already have on an individual basis. With sustainable investing you are thinking long term – about your education, your children’s education and things that are 10, 20 years off. With sustainable investing, you’re thinking about your hopes for the next generation. Sustainable funds are seeing a surge in assets, and some of the world’s largest asset managers see growing opportunities in sustainable investing. 

Morningstar reported that 23 new sustainable funds were launched in the first half of 2020 with more to come. In a year like 2020, risk management is essential and sustainable investing has long been used as a risk-management tool.

Talk with your advisor about how he or she manages sustainable portfolios and how you might add sustainable investing to your portfolio. If you’re looking for an advisor to help you with sustainable investing and ESG regulations, contact our advisory team at VentureXchange.

ESG in private equity: a moment of glory?

ESG in private equity: a moment of glory?

ESG has gained more traction in the private equity industry in recent years. Moreover, ESG has become a core demand from limited partners (LPs) amid consumers behaviour change and the growing climate change concerns of socially responsible millennial investors.

That said, ESG considerations in private equity are being formed within contracts more frequently, and LPs can use their leverage and “walk away” if their terms are not met. With dedicated and active management, ESG investing can help firms increase return rates and outperform the market.

There has been an “evolution” among private equity managers in integrating ESG over the last three years, said Michael Cappucci, senior vice president, from Harvard Management Co. He also mentioned that ESG is now core to LPs expectations.

Investors in different regions often have different priorities for ESG investments and employ distinct strategies for influencing the behaviour of portfolio companies. In Europe and the United States, social and environmental concerns may be paramount, while in Japan, corporate governance and diversity are at the top of the list.


ESG Success in Private Equity


PE firms are moving along with ESG objectives, as long-held concerns of trade-offs between maximized returns and ESG investing have been challenged. Over the years, compelling evidence has emerged showing that the return on investment value can be magnified by incorporating ESG factors into the decision making process. Morningstar research found that investors can build global portfolios tilted toward high-scoring ESG companies without compromising return.

However, many investors make a similar mistake by focusing on a global ESG objective, instead of the factors that affect their operations and performance in a financially material way.

We can agree that a couple of months have been unprecedented. However, we have seen sustainability funds outperform their peers since the COVID-19 crisis began and across the first quarter, both in developed and emerging markets. Again, figures from Morningstar suggest that in the period through February 28, which saw the biggest downturn in stock prices globally, “the returns of nearly two thirds (65%) of sustainable equity funds ranked in their category’s top half.

More than four-tenths (43%) placed in the top 25% of their group and only 10% were in their peer group’s bottom 25%”. Morningstar data also shows that in March, when market activity saw further downturns as countries began to implement lockdown measures, 62% of ESG-focused large-cap equity funds outperformed the global tracker.


ESG in Private Equity Industry: Actions and Intentions


In 2020, private equity firms have raised more than $370bn of commitments to funds that integrate ESG principles into their investment decisions, according to data provider Preqin. However, a recent survey by Institutional Investor found that fewer than 10 per cent of 8,810 global private equity firms, with a total of $3.4 trillion under management, are signatories to the Principles of Responsible Investment.

ESG in private equity is here to stay, as well as ESG investment opportunities will increase over the next three-five years. However, the lack of harmonization of sustainability frameworks is a brake to ESG integration. The survey also found 53 per cent of respondents admitting they are not using any ESG framework like the Sustainable Development Goals (SDGs) and Taskforce on Climate-related Financial Disclosure (TCFD) to identify opportunities at a tactical level.

Therefore, private equity firms should consider setting a strategic vision and fostering a culture that sees ESG as a significant value creation opportunity.

The next stage is that investors will not just want a commitment to ESG – they will also want tangible proof of how the private equity fund has delivered on that commitment.

Digital Sustainable Finance Opportunities

Digital Sustainable Finance Opportunities

In the age of COVID-19 digital transformation is demanded, but so is the commitment to face climate change. Technology lies at the core of attempts to prevent global warming. Therefore, the combination of both sustainable and digital finance can lead to new business models that will reduce energy consumption.

According to PWC recent research, over 1200 tech startups have arisen to the market. Investment in climate tech has grown at almost five times the rate of the overall global venture capital market, with similar growth seen in numbers of deals.

Consumer demand for sustainable business practices has rocketed. The first generation of ‘climate tech unicorns’ have emerged, with companies including Tesla, Nest, and Beyond Meat showcasing the importance of disruptive consumer brands that also deliver substantial sustainability impact.

Channelling sustainable investments is a critical challenge for the global financial system. Sustainable finance has, therefore, become an integral part of how many financial services firms operate.


What is sustainable digital finance?


According to The World Economic Forum, the definition for digital finance refers to the integration of big data, artificial intelligence (AI), mobile platforms, blockchain and the Internet of things (IoT) in the provision of financial services.

Sustainable finance, on the other hand, refers to financial services integrating environmental, social and governance (ESG) criteria into the business or investment decisions for the lasting benefit of both clients and society at large.

WEF believes that blockchain represents a core element of sustainable digital finance — a new paradigm that combines emerging technology with environmentally conscious business models.

Moreover, blockchain technology along, with artificial intelligence, mobile platforms and the Internet of Things combined with ESG objectives, could help governments and organizations reach sustainable goals.

In addition to that, technology can also help raise consumer awareness about the environmental and social implications of consumption and allude them to more conscious sustainable choices.


Consumers behaviour affects sustainability


Consumer behaviour can affect investors decision to incorporate sustainability into investment decisions. A clear ESG commitment can also attract Millenials, as sustainable consciousness consumers. A 2019 Morgan Stanley Institute for Sustainable Investing survey of high net worth investors found that 95% of millennials were interested in sustainable investing.

In Switzerland, Deloitte research suggests that 42% of millennials started or deepened a business relationship because of a company’s positive impact on society or the environment.

Sustainable products are starting to demonstrate higher growth rates than their non-sustainable rivals. In the US, sustainability-marketed products make up just 16% of the consumer packaged goods market but are responsible for 55% of the growth. 

The shift to digital persists across countries and categories as consumers in most parts of the world keep low out-of-home engagement. Food and household categories have seen an average of over 30 per cent growth in online customer base across countries.

Lastly, WEF believes that sustainable digital finance will play an essential role in efficiently channelling this capital to fuel innovation, growth and job creation, at the same time supporting the transition to a sustainable, low-carbon economy. The future is now, with the wake of COVID-19, digital sustainable finance could focus investors on more sustainable economic oppor

ESG Investing Guide: Advancing ESG strategy

ESG Investing Guide: Advancing ESG strategy

Venture capital firms have historically been the first investors in many of the world’s largest and most influential companies. You have been hearing more and more about ESG investing. Research is increasingly showing that this investing method can reduce portfolio risk, generate competitive investment returns, and help investors feel good about the stocks they own. That said, it’s not a surprise that ESG investing is gaining more traction.

ESG investments are growing rapidly, comprising about 25 per cent of all funds under professional management, according to various estimates. At the same time, there are people who believe that you cannot make money through sustainability, social justice, and ESG investments. That said, it is time to establish some ESG standards for investors. The goal of ESG investing is to provide suitable returns and benefit the greater good. One of the ways it does this is by minimizing risk.

ESG portfolios not only have outperformed traditional financial assets this year but also a data analysis prepared by Morningstar concluded that almost 60 per cent of sustainable investments delivered higher returns than comparable funds over the past decade. 

ESG investing has often been defined, not so much by globally accepted and agreed definitions and standards. Furthermore, several terms come into play for ESG investments. That includes: sustainable investing, impact investing, socially responsible investing, and more. Many investors think they can “do good” by investing with one of these objectives in mind.

While that may be true, industry experts have come to the conclusion that ESG investing needs standards. ESG reporting and data may help align what managers say they are doing with ESG outcomes.

How ESG investing is different

ESG is most like SRI in that it focuses on investing in publicly traded companies. However, ESG investors actively opt in to companies because of the impressive environmental, social, and governance attributes they’ve demonstrated. Sometimes, ESG homes in on companies’ material issues, which depend on their industry. For ESG investors, charitable giving is not usually a financially material aspect to consider. But climate change, along with its causes and effects, is a financially material issue, as global warming will substantially impact every company everywhere.

The ESG investment movement has every reason to be optimistic in the short term. There is growing investor and stakeholder momentum for the goals of expanded disclosure, improved corporate governance, and measurable plans and impacts, especially for climate change.

When rationalizing ESG investing with the greater SRI industry, it’s important to remember that ESG is also a stakeholder-centric theory, which argues how companies treat all their stakeholders will impact their long-term success or failure. Moving ahead, ESG investing has experienced a great deal of traction within the financial world.

ESG returns

According to Morningstar, investors can build global portfolios tilted toward high-scoring ESG companies without compromising return.

Companies with low levels of gender, racial, and other forms of diversity across workforces, management teams, and boardrooms lose out on intellectual capital and valuable perspectives. 

On the other hand, companies that excel at engaging their employees to achieve per-share earnings growth more than four times higher than rivals, according to Gallup. Compared with the companies in the bottom quartile, those in the top quartile when it comes to engagement generate higher customer engagement, higher productivity, better retention, fewer accidents, and 21% higher profitability.

Plenty of data backs up the notion that high-ESG companies are also well-run, ultimately producing financial results comparable to or superior to their low-ESG peers.

Ethical investing has come a long way since SRI was a small niche in the investing universe.

Millenials adapting ESG

According to US SIF’s 2018 Report on Sustainable, Responsible, and Impact Investing Trends, total SRI assets jumped 38% to $12 trillion since 2016 in the U.S. alone. A frequently cited reason is that millennials consistently show a tendency to crave social responsibility, whether it’s in the products they purchase, the organizations they work for, or their investment portfolios.

Millennials are a massive generation, comprised of at least 71 million individuals who were born between 1981 and 1996 in America alone. Millennials represent $600 billion in annual spending in the U.S., a figure expected to grow to $1.4 trillion annually by 2020, according to Accenture.

Most millennials have yet to weather a major economic downturn before and so their investment strategy remains untested. In the event that we see a recession, ESG-related sectors could take a significant hit – especially if younger investors bail on their ESG investment theses under pressure.

Sustainability in Business in the post-COVID world

Sustainability in Business in the post-COVID world

In the post COVID, world sustainability in business is becoming more meaningful. The research found that 69 per cent of those experiencing significant disruption expecting green issues to rise in importance. 

That seems to be the truth. Despite the extremely challenging market conditions, businesses are facing sustainability is one they should prioritize. 

The research was conducted by Carbon Trust’s second annual ‘Corporate attitudes towards sustainability’ survey, by B2B International with large companies across Germany, France, Mexico, Singapore, Spain, and the UK. 

Three-quarters of organizations interviewed were negatively impacted by Covid-19, with four per cent saying it represented an existential threat to their organization. Furthermore, 32 per cent reported that their operations had been heavily impaired.

Organizations around the world are considering their role in delivering a green recovery – achieving net-zero targets at the same time as fostering economic.

Driven by fast retailing fashion and footwear industry is also facing increased social, environmental, and regulatory pressures.

Leading brands are rethinking their business models and leading the change to a more sustainable future for the footwear and fashion industry. And consumers are looking for companies with a sustainable soul. For example:

  • 93% of global consumers want more of their favourite products, services and retailers to support worthy social issues
  • 96% of people have a more positive image of companies that support Corporate Social Responsibility
  • 93% of shoppers are more loyal to brands that back cause
  • 91% of customers are likely to switch brands (given comparable price and quality to one associated with a good cause).

We should all commit to better business practices to create a more sustainable business and inclusive world for all. 

Sustainability in business practices

It is time for more sustainable supply chains, a greater focus on green finance and a commitment to social innovation. 

As McKinsey reports, there has been much discussion about the shortening of supply chains, reshoring or near-shoring, and emerging hubs of manufacturing such as the Philippines, Hungary or Costa Rica. In the McKinsey survey, 85% of respondents struggled with insufficient digital technologies in the supply chain, while 90% now intend to increase digital supply chain talent in-house.

Harvard Business Review covers in-depth how sustainable supply chains form a better business practice. The study covers how multinational corporations have pledged to work only with suppliers that adhere to social and environmental standards. In the study, the aim is to describe various ways that MNCs can tackle the risks and understand the situation.

From solar power farms to flood defences, the world needs to build more sustainable infrastructure. To build it, we need to have specific targets on the issuance of green finance. First things first, the private sector should collectively agree on a common set of environmental, social, and governance (ESG) metrics to promote green finance.

Once those metrics are established, businesses should integrate sustainability reporting into financial updates as a matter of course.

Finally, the private sector has a massive role in supporting start-ups in the social innovation space and helping ensure everyone has access to the digital tools they need. As an example, Microsoft launched an initiative to help 25 million people worldwide acquire the digital skills needed in the post – COVID world.  

If you are looking to help bring sustainability in business, lend your expertise and back the entrepreneurs. There are many examples of small business owners, start-ups and foundations who help bring sustainability to the economy. Another sustainable start-up is Agrivi, from Croatia, with a vision to change the way food is produced in its core and positively impact one billion lives by helping farmers reach sustainable, resource-efficient and profitable production.

To sum up, businesses should rethink the role of business in the economy. Bringing sustainability in business will help society when the next crisis arises, be it financial, health, cyber or otherwise.

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