Why businesses are getting more political

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Head of sustainability-focused consultancy BSR, Aron Cramer is one of the top advisors to large corporations seeking to improve their environmental and social impacts. When we spoke this week, he had some warning words to executives with a narrow view of what it means to be a responsible business. Cramer believes that traditional corporate approaches to controversial political issues — avoiding them a mile — are becoming increasingly unacceptable.

With growing concerns about civil liberties and democratic integrity in many parts of the world, “it will be more and more” on which side “. A moment, “he said. “Companies are expected to be weighted — and many CEOs and boards are uncomfortable doing that.”

In the United States last year, prominent signs of a change in the times emerged when companies from Amazon to General Motors opposed the “discriminatory” voting legislation proposed by Republicans in various state legislatures. .. According to Kramer, companies need to expect more pressure to intervene in such issues. Especially from a new generation of employees who “want their values ​​to be reflected in their organization.”

The latest example of this trend is from the United Kingdom, where 200 companies have blamed the Act of Parliament, which imposes major new restrictions on public demonstrations. Continue reading about it, the intersection of ESG and M & A, and the environmental threats that top-claimed in the World Economic Forum’s new Global Risks Report. Simon Mandy

“Dangerous” UK Police Bill Causes Business Backlash

© Bloomberg

The recent surge in environmental and social protests in the UK has prompted a harsh reaction from Boris Johnson’s government trying to push through tough new curbs and penalties around the protests.was suggested New police law Caused resistance from civil liberties activists. Many companies are now adding their voice to the disapproved chorus.

“This bill is dangerous. It’s an authoritarian. I’m reading a statement from Ben & Jerry’s, a subsidiary of Unilever, a Vermont-based ice cream brand. Clothing brand Patagonia and cosmetics company The. It is one of 200 companies that participated in public campaigns against the bill, such as body shops. Intervention is about the responsibility of companies to speak out on legal and public policy issues, even if there is no obvious direct impact on the business. I raise some interesting questions.

The bill is being discussed today in the House of Lords, the Senate of the British Parliament, prior to voting on Monday. If it is enacted, in recent years, headline protesters, from Extinction Rebellion to Black Lives Matter to British insulation, will be at significantly greater risk of prosecution and imprisonment.Falsify statues like the slave trader Edward Colston Defeated by anti-racist demonstrators 2020 — Currently up to 10 years in prison. If protesters make enough noise to cause “serious turmoil” in nearby organizations, they can face 51 weeks in prison. Other sections of the bill said, “It will greatly expand the police’s ability to impose conditions on the rights of public lines and meetings .. Keep fully open what those conditions are.” , This useful analysis It is a non-profit Good Law Project run by a lawyer.

The definition of corporate social responsibility has generally focused on how a company operates its business, rather than how it uses its voice to influence the law. .. However, many companies that resist the new police bill have social and environmental responsibilities at the core of their public brands, but they need to take this stance in order to fulfill their mission. I told me I felt it.

“This is about the important values ​​that are inherent in our business,” Patagonia UK representative Alex Beasley told me. “It’s about staying consistent and putting our values ​​into practice. It’s not about increasing sales.”

Still, the intervention has business logic, said Chris Davis, head of sustainability at The Body Shop, a subsidiary of Natura in Brazil. For many Body Shop employees, he pointed out that the company’s proud commitment to social justice is the main reason for working there. Many consumers are also attracted to these qualifications.

This puts things like The Body Shop and Patagonia in a different situation than the big UK companies that haven’t publicly criticized the bill, although consumers are biased towards the end of the liberal range. increase. For example, a large consumer business like Tesco runs the risk of alienating a large number of conservative shoppers. “I can understand their hesitation,” Davis said, saying that where political involvement is involved, “there are still boundaries that many companies will not cross.” Simon Mandy

ESG is poised to become an important element of the M & A field

As entrepreneurs had strategies when they set up ESG-friendly start-ups in the last decade, they were usually very passionate about the cause or very dissatisfied with the mainstream market. I created it because I was willing to attack on my own. It seemed dangerous.

How will the times change? Last year, there was a lot of merger and acquisition activities in the ESG world, with established companies rushing to buy ESG-friendly tidler, establishing environmentally friendly credit for their existing businesses, and from investors. Avoid criticism.

First half of 2021, 140 Low Carbon Energy M & A Transactions Completed worldwide, each is worth over $ 50 million.In addition, the two blockbuster deals included Goldman Sachs Get ESG-focused asset management firm NN Investment Partners with € 1.6 billion and Blackstone purchase Sphera, an ESG data and consulting group, is $ 1.4 billion, both aimed at increasing sustainability reliability.

And if This survey Despite any guide from EY, enthusiastic deals are likely to continue in 2022, and some of the founders of ESG start-ups are very happy (that is, rich).

The numbers are stunning. According to a survey, nearly two-thirds of global CEOs expect their company to pursue acquisitions within the next 12 months. This is an increase from 48% in early 2021.

Even more surprising is that 99% of the CEOs surveyed said they took ESG issues into account when making these acquisitions. This makes us wonder who those 1% of contrarians are, but that’s another matter).

Only 6% of EYs said they were actually away from trading because of ESG concerns. This suggests that these ESG concerns are deep in the skin or are already being adhered to by the companies considering it.

In any case, it is becoming clear that corporate boards are no longer willing to ignore the need to maintain ESG values. In addition, financiers say they are more insightful when companies engage in these transactions.

ESG is maturing, but is now at a higher level, JP Morgan Global Research Chair Joyce Cheung told Moral Money before investors agreed to sustainability claims. Claimed to be waving a flag of caution. M & A space.

Joyce Cheung, JP Morgan's Global Research Chair

Joyce Cheung, JP Morgan’s Global Research Chair © Bloomberg

It’s easy to see why investors are becoming more cautious. Last year there was a wave of hype about the idea that ESG strategies are good for investors. For example, Morgan Stanley economists have published two widely read reports advocating ESG strategies. Improving investor returns — And reduced the downside volatility.

But this week, a team of economists from Colombia release Their own research aimed at Morgan Stanley’s claim: This is an ESG strategy usually Force investors to make modest sacrifices With their return.

Colombian researchers aren’t the only ones hesitating — 65% of CEOs Encountered Investor resistance in promoting ESG-focused M & A transactions has created tensions in reducing risk.

However, such comments are unlikely to discourage a company’s board of directors. Nor is it the host of entrepreneurs who want to ride the Green Wave. Take Trevor Neilson with you. He used to work in the VC world, but last year he left it to co-found Waste Fuel, a waste-to-energy startup.

It once looked like a dangerous career move. However, Neilson becomes an entrepreneur because he is confident that his company will be acquired by one of the investors (who is already a top customer) or will grow into the next “climate unicorn”. It now claims to be a “safe” option. Compared to the VC world. Kristen Talman

Today’s chart

GM130114_22X Identify the most serious risks worldwide in the next decade

Environmental threats dominate the list of The most significant long-term risk in the worldAccording to a recent poll of about 1,000 experts and staff.

In the World Economic Forum’s Annual Global Risks Report, survey respondents pointed to “climate change failure” as the biggest long-term threat over the next decade. The report predicted that “chaotic climate change” would continue and warned that a transition that did not consider “social impacts” would exacerbate existing inequality and lead to greater geopolitical tensions.

Smart lead

  • Beyond Meat is one of the leading players in alternative proteins and may soon need alternative strategies.with this Smart pieceEmiko Terazono explains that plant-based meat companies have become one of the most scarce companies in the US market.

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