The Market is Demanding a More Inclusive Capitalism

July 08, 2022

Notes from the Council | Newsletter June 2022

This month, the Council for Inclusive Capitalism, with our partners Ceres and Climate Action 100+, hosted U.S. Energy Secretary Jennifer Granholm, global CEOs, and leading investors and company representatives to discuss the need for a just energy transition, where the move to a clean economy accounts for the needs of employees, consumers, and communities. Our speakers agreed that as geopolitical challenges, inequality, and inflation grow across the globe, the imperative for leaders in all sectors to work together on a just energy transition has never been more urgent.  Secretary Granholm said it best: “These crises have a common solution, which is clean energy, and the opportunity for communities that have been left behind is astonishing… I encourage you to be intentional about the global investments you are making. Investing to minimize climate risk while smoothing the energy transition is just good business. We have to lift up communities and people with the transition to clean energy.

The market is asking for investment products that mitigate these risks and create long-term stability in the economy. People are telling corporate leaders that environmental, social and governance (ESG) issues are important to them. According to EY, 39 percent of investors are currently invested in ESG products – an increase from 33% in 2020. It would be a breach of fiduciary duty to ignore these voices, and the market is working to catch up. Deloitte has found that the number of firms with at least one ESG fund has grown nearly 300 percent since 2016.

As the market for ESG products grows, accountability and transparency are critical to ensure that these aspirations are backed with concrete action. That’s why we have been excited to launch a new learning series for Council members on how to navigate this fast-moving landscape. This month we hosted convenings on how companies can implement a just transition and an explainer on Stakeholder Capitalism Metrics. With the European Union’s European Financial Reporting Advisory Group (EU EFRAG), the United States Security and Exchange Commission (US SEC), and the International Sustainability Standards Board (ISSB) taking steps to prioritize ESG standards, the Council will be hosting a series of discussions to help our members understand these important and critical developments to bring transparency to the market.

Market demand is just one reason why companies and asset managers are focused on how to bring accountability and effective implementation of ESG goals to achieve long-term profitability and lasting value creation. Council members know that there is both a moral and a market imperative for responsible business operations. They have been working to implement our guiding principles and make our economy more inclusive and sustainable through their leadership, and have now made nearly 600 commitments on our platform for action. I hope you’ll consider joining them. Wishing you all a safe and restful summer.

Lynn

Lynn Forester de Rothschild
Founder and Co-Chair
View 180+ actions supporting decent work and economic growth.

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Energy companies, investors urge peers to act for a just energy transition

Three-bladed wind turbines sit atop a line of green grass-covered hills. Image text reads: Just Energy Transition: A Framework for Company Action. A new resource for planning climate action that champions people as well as the planet.

The much-needed global transition to low-carbon energy cannot succeed if it isn’t just, and companies can act to ensure the best possible outcomes for people and the planet. This was the message global leaders in green finance, labor, and energy shared with a virtual audience of more than 600 investors and business leaders during a webinar hosted by the Council for Inclusive Capitalism and Ceres on Monday, June 20, 2022.

U.S. Secretary of Energy Jennifer Granholm opened the event discussing two of the most urgent crises facing the world: climate change and the disruption of energy supplies due to Russia’s invasion of Ukraine. Marcie Frost, CEO of CalPERS, and Lynn Forester de Rothschild, Founding and Managing Partner of Inclusive Capital Partners introduced the Framework, while Anne Simpson, Franklin Templeton Global Head of Sustainability and Climate Action 100+ (CA100+) Steering Committee member, demonstrated how its areas of actions map to the Climate Action 100+ Just Transition Indicator.

Collaborating partners on the Framework, Sharan Burrow, General Secretary of the ITUC, and Mark Carney, UN Special Envoy on Climate Action and Finance, discussed the worker perspective and the need for a just transition. Bernard Looney, CEO of bp, and Mark Cutifani, former chief executive of Anglo American, shared examples of how they are applying the Framework’s tenets within their corporations and the positive results.

Watch the full 60-minute webinar here.


 

Must Read: State Street’s ‘Future of ESG’ report

“Whatever our individual perspectives of ESG may be, we all would agree that it is a complex subject,” write the authors of State Street’s latest research report, which explores the growth of ESG across the financial system and describes its evolution.

State Street argues that ESG is a necessary response to market demands from consumers, employees, and investors — all of whom need this information to understand which companies are creating broad-based value sustainably.

“We see ESG as another link in the growing chain of valuation metrics, bringing previously unaccounted value into the familiar world of financial valuation. And that means having the right tools will be more important than ever,” writes co-author Rick Lacaille, Global Head of ESG, in the preface.

The report identifies long-term drivers of ESG, as well as trends that matter in the short term, and takes stock of the solution space for incorporating ESG considerations into financial decision-making.


 

Understanding and Using Stakeholder Capitalism Metrics

Sharing progress isn’t always easy. People are demanding greater responsibility from the organizations they work for, buy from, or invest in. Organizations that understand their impact and disclose it are better positioned to create value for their stakeholders, manage challenges, and realize opportunities.

On June 10, the Council hosted our members for “Stakeholder Capitalism Metrics: What they are and how to use them,” the first webinar in our exclusive new learning series. Panel speakers from the World Economic Forum (WEF), EY, and Bank of America introduced WEF’s Stakeholder Capitalism Metrics initiative as an entry point for companies looking to ensure stakeholder impact is accounted for in decision making. The full webinar is now available to view on our website. Watch it here.

 


Reflect and Share With Us

What is one unexpected lesson you have learned by making your organization’s operations more inclusive and sustainable? Respond here.

Submit your thoughts and allow the Council to amplify your forward-thinking leadership. We will contact chosen authors for permission to publish their ideas.


 

Steward action: bp advances human rights throughout its supply chain

Council Steward bp is committed to delivering energy in ways that deliver decent work, quality jobs, and supports the livelihoods of local communities. By 2030, they will evaluate 100 percent of high risk and 50 percent of medium risk supply chains in line with their labor rights and modern slavery principles and remedy priority findings raised with suppliers.

This action is part of the “Just Transition” objectives included in bp’s 2021 sustainability report, which outlines company progress on 20 aims for getting to net zero, improving people’s lives, and caring for the planet. In that report, bp shares their strategy:

“We expect our suppliers to operate in line with our code of conduct, human rights policy and other expectations set out in our supplier expectations document and seek to work with those who target sustainability in their supply chain. Whenever possible we use contracts to drive this objective – for example, we may require contractors to meet local workforce standards and support local enterprises. Our new labour rights and modern slavery principles are also available to help bp businesses check suppliers’ performance.”

To learn more, view bp’s modern slavery and human trafficking statement, and download the Just Transition strategy section of their 2021 sustainability report.

 


 

Ally Resource: Inaugural Report on the Health of Democratic Capitalism

A newly released report from Council Ally member The Denny Center for Democratic Capitalism at Georgetown Law finds that while capitalism continues to generate growing total wealth, produce new innovations, and provide jobs, the economic system also faces significant pressures including growing gaps in incomes, a slowdown in upward mobility, inadequate stewardship of natural resources, a decline in business investment, and a decreasing quality of market competition.

Report authors write: “While almost everyone agrees that free market capitalism is the most efficient wealth creation system, reconciling the benefits of capitalism with broader societal needs and aspirations is a perennial tug of war. […] Maintaining balance between the two is critical to the future of both capitalism and a flourishing democratic society.”

The center used a clinical, data-driven approach to evaluate democratic capitalism’s overall health – and compared key American trends to those in other democratic economies.

 


 

Council staff shares a day of service with NYC’s Urban Outreach Center


Our Council staff reorganized two tons of pantry goods, mopped floors, and helped the Urban Outreach Center prepare for the following day’s sidewalk food distribution.

In celebration of the United States’ Juneteenth federal holiday, which commemorates the effective end of legal slavery in the country, the staff of the Council gathered in New York City to serve our neighbors through the Urban Outreach Center (UOC), a nonprofit working to end the hunger gap for tens of thousands of New York residents by serving more than one million meals’ worth of healthy food each year.

The Center offers justice-centered hospitality spaces where low-income New Yorkers can access necessities and social services they need, with the dignity they deserve.

“We know that food is a basic resource. We believe that dignity is a basic resource, too. It doesn’t just matter how much food we serve, it matters how we serve that food,” emphasized Executive Director Rev. Jordan Tarwater in his welcome to the volunteer group. “Every day, we’re breaking down barriers, building relationships of trust, and helping our food-insecure neighbors take the next step toward self-sufficiency.”

As we pursue a more inclusive capitalism that creates long-term value for all, we find inspiration in the tenacious mission and human-centered approach demonstrated by the Urban Outreach Center. Please click below to read more about their programs and sponsorship opportunities.

 


 

📅 Upcoming events

“The Outlook for Inclusive Capitalism” 2022 Midyear Dialogue
July 21, Virtual

The Council welcomes all CEO-level members to join us for a virtual mid-year leadership gathering to discuss the role of companies in our current time of change. The event will feature remarks from representatives of the White House and Church of England. For more information about attending, please contact Engagement & Outreach Associate Vaughn Sayers, [email protected].

Members only

 

Human Capital Metrics
September 13 & 15, Virtual

Companies and investors are increasingly focused on advancing environmental, social, and governance (ESG) goals to achieve long-term profitability and lasting value creation, but companies are often confused by how to approach reporting on S goals in particular. The Council for Inclusive Capitalism, the Thomson Reuters Foundation, and Shift will invite Council members and experts on people-related issues to join a webinar series on September 13 and September 15 to discuss best practices, key tools and resources for companies to prepare for expanded “S” disclosure. Council members can expect a formal invitation and registration link in July. For more information about attending this event, please contact Melissa Victor, Programs Manager for Community Engagement at [email protected].

Save the date
Members only

 


 

🤝 Welcome New Council Members

Benjamin Swan
Founder and CEO, BECO Ventures

Andrei Cherny
Co-Founder and CEO, Aspiration

Denys Tsvaig
CEO, DeHealth

Peter Ngunyi
CEO, EarlyBird Venture Lab

Lilan Dayananda
CEO, Elzian Agro

Terry Nelidov
Managing Director, Erb Institute at the University of Missouri

Nick Robins
Professor in Practice for Sustainable Finance, LSE Grantham Research InstituteKen Wilson
Co-Founder, Impact PlanetDan O’Neil
Managing Member, O’Neil Cinemas

Les Cowie
President and CEO, Promising People Enterprises

Francisco Fernandes Da Costa
CEO, Sustainary

Mike Lubrano
Managing Director, Valoris Stewardship Catalysts

Hans Vestberg
Chairman and CEO, Verizon

Alisa Gus
CEO, WishKnish Corp.

 


 

📰 Inclusive Capitalism and Members in the News

Ford Foundation | Darren Walker: Ford Foundation doubles investment for trans organizations, makes sweeping commitments to support LGBTQ+ communities

M&T Bank | Rene Jones: M&T Bank expands community investment with new $25 million ‘Amplify Fund’

Repsol | Josu Jon Imaz: Iberia, in collaboration with Repsol, operates its first long-haul flights with biofuel produced from waste in Spain

Forbes | ESG faces challenges but investors show little sign of giving up on it

Deloitte | Punit Renjen: Deloitte research reveals inaction on climate change could cost the world’s economy US$178 trillion by 2070

Bloomberg | Mark Carney: Biggest net-zero finance group starts Asia network

Plastic Bank | David Katz: Plastic Bank’s partnership with METRO

Business Insider | Brian Moynihan, Punit Renjen: CEOs from Infosys, Deloitte, Pfizer, and Bank of America spoke about prosperity and ESG at the World Economic Forum

The Guardian | Dr. Akinwumi Adesina: AWIEF and African Development Bank’s Affirmative Finance Action for Women in Africa (AFAWA) join forces to increase access to finance for women SMEs

Boston Consulting Group | Rich Lesser: BCG accelerates its climate action and sustainability commitments with Emirates Nature-WWF “Leaders of Change” program partnership

Nestlé | Mark Schneider: Nestlé Cereals announces launch of its ‘Wheat Plan’ to support UK farmers adopting regenerative agriculture practices

Forbes | Why the pushback on ESG is good for ESG

Pensions & Investments | Cassandra Lichnock: Asset owners’ investment lens changes

Pensions & Investments | Coalition for Inclusive Capitalism: ESG rules for private markets begin to sprout up

Philippine Star | Eric Francia: AC Energy lends P1 billion to Solar Philippines unit to fund new projects

The Rockefeller Foundation | Naina Subberwal, Rajiv Shah: AVPN and The Rockefeller Foundation launch the Asian Impact Leaders Network

Fortune | The top trends in ESG disclosure from Fortune 100 companies

Bloomberg | Mark Cutifani: World’s biggest hydrogen trucks start work at Anglo American

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