Recently, Lawrence Heim – himself the author of the book “Killing Sustainability” – sent me this 17-page essay on “greenwishing.” It’s written by Duncan Austin – a former investment manager at a large sustainable investment firm – and traces the rise in investor & consumer interest in sustainability. While it seems like that might be a good thing, Duncan opines that pushing sustainability as a cost-free endeavor – or a half-baked profit-driver – is hurting the cause. Of course, here’s the current problem with trying to do it any other way:
Today, companies can only pursue sustainable behaviors that are profitable. This rules out many sustainability actions that corporations are uniquely positioned to offer–and used to provide–though certain initiatives can make the grade as long-term investments, with characteristic extended payback periods. Yet, corporate pronouncements of such long-term investment plans are precisely the klaxon calls that bring activist investors running to restore short-term profit-maximizing order.
So here we have some evidence that deep down, even the most ardent proponents of sustainability reporting know that those metrics are always going to be “second class” compared to financial figures (even though financials don’t reflect external costs). In other words, reporting on sustainability metrics isn’t the answer. Duncan calls on people in the sustainable business community to take a more collaborative approach – e.g. by prodding their companies to disclose political contributions, not lobbying against environmental protection policies and adding disclosure – but not the type we’ve been focused on:
The disclosure now required is not more detail about a company’s own greenhouse gas emissions or water use, but rather what companies publicly stand for regarding the changes in rules and prices needed for a more sustainable world–and what, exactly, they are doing about it. This is the critical question we must now ask our portfolio managers and corporations.
It’s an interesting idea and aligns with the BRT’s recent statements. A few companies are even forming “public policy” board committees . Investors & lawmakers will probably have to take up the mantle on this before directors would do anything drastic…but some companies might actually benefit from supporting legislation that “levels the playing field.”
-Liz Dunshee, TheCorporateCounsel.net September 20, 2019
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