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By Jeff Greene

Today, rather than being the world’s poster child for a fair and equitable economy, the U.S. -- home of the American Dream -- is one of the least equitable among Western nations.

It wasn’t always this way. I was fortunate to have been raised in the 1960s in a country that had opportunities for many to do better and do well. Growing up in a middle-class family, I started with absolutely nothing, and was able to live the American Dream to the fullest. Yet today, too few overcome the fundamental ways in which our current system rewards those with money and penalizes those who simply work hard.

This situation will only get worse as automation expands, and technology replaces more and more tasks. As a result, the American Dream is becoming the Disrupted Dream.

But why should business leaders care about the lack of upward mobility in America? As a successful businessman, I’ll give you three reasons why.

1. It’s good for business

As leaders of our businesses, it’s easy for us to ignore the consequences of the decisions we make that can create ripples in society. When we set impossibly high requirements for the candidates we interview, or we have unconscious gender bias in hiring, or we ignore the needs of our workers to receive a living wage in high-cost cities, we are encouraging conditions that can have real impacts on our economy.

We can make different decisions, yet still run profitable businesses. A growing cadre of leaders is demonstrating ways in which they can already make a difference. Quiktrip CEO Chet Cadieux pays employees a variety of bonuses, yet generates 50 percent more profit per square foot than his competitors. Paul Tudor Jones’ Just Capital is working toestablish new standards of corporate value beyond simple quarterly-driven metrics. Starbucks’ Howard Schultz has offered online degree programs to all of his employees without a four-year degree.

All of these decisions can be good for business, by raising the quality of our worker pool, increasing employee loyalty, and developing better reputations for our organizations.

2. A consumer-driven economy needs consumers

About 40 percent of our economy is directly driven by consumer spending. That’s not as much as the urban myth of 70 percent, which includes fuzzy elements like healthcare spending. But 40 percent is still a substantial portion, large enough to send our economy into a tailspin when it drops dramatically, as it obviously did during the Great Recession.

As the gap between “have-lots and have-nots” grows in America, there is simply less discretionary spending by those in the middle class. The '1 percent' can’t possibly spend enough to make up for this loss. Your business won’t thrive if you don’t have customers who can buy your products and services. We all need a thriving economy, and a thriving middle class, to ensure that our businesses stay healthy.

3. You can give others the same opportunity that you had

Let’s face it, success in business is a combination of hard work, business smarts, and luck. Over time, however, we often tend to discount the third, to the point where we don’t credit our luck much. There are plenty of people who are smart and work hard who haven’t yet been successful, while some of us were lucky in some way that contributed dramatically to our success.

Maybe you were born into a family of means. Perhaps you grew up in a town with a broad range of opportunities. You could have gone to a college with a tremendous alumni network that helped to fuel your success. Or you might have made a big bet in your business that went especially well - but could have turned out especially badly.

If we admit it to ourselves, we’ll realize that all of those occurrences to some extent depend on luck. As former Arkansas football coach Barry Switzer is credited with saying, “Some people are born on third base, and go through life thinking they hit a triple.” Yet many Americans don’t have the same opportunities that we had, so they start off a lot farther back, no matter how smart they are, or how hard they work. We need to give them a leg up, so they aren’t hobbled by the circumstances that kept them from having the same kind of success that we’ve had.

When I talk to everyone from small business owners to titans of industry, I see a sea change in the way people are beginning to think about kickstarting the American Dream. Business leaders can make conscious decisions, today, that can have demonstrable effects on increasing upward mobility. Fixing the systemic imbalances in our economy isn’t some theoretical exercise, and the time to move toward a more inclusive economy is now.

In America, we need many leaders from business who will work together to develop a vision for our inclusive and resilient economy of the future. I believe that creating a more inclusive economy is the defining issue of our time, and that leaders like you can have a real impact. At the end of the day, it’s not just good for the economy: It’s good for business. Yours.

Image credit: Flickr/Miguel Virkkunen Carvalho

Jeff Greene is an entrepreneur, the philanthropist founder of The Greene Institute, and the host of Closing The Gap, a conference bringing together leading thinkers and thinking leaders to develop strategies for an inclusive economy. Learn more at closingthegap.co.

Beauty industry association Cosmetics Europe has called on its 4,000 members to phase out the use of solid microplastic ingredients in wash-off cosmetic and personal care products.

The move has been welcomed by a number of conservation NGOs, though some beileve that the edict does not go far enough.

Laura Foster, head of pollution at the Marine Conservation Society (MCS), commented: “Cosmetics Europe’s recommendation is not broad and ambitious enough but it demonstrates a clear willingness to work towards reducing the amount of plastic litter in the marine environment.

"It represents a logical step, emphasising the widely available alternatives first, towards an all-encompassing discontinuation of unsustainable solid microplastics in personal care and cosmetic products.”

While acknowledging its shortcomings, the MCS, Fauna & Flora International and Seas At Risk say that the announcement indicates Cosmetics Europe’s willingness to collaborate with the European authorities and international association partners, helping to pave the way for further discussions and progress in tackling this avoidable source of microplastic pollution.

Emma Priestland, marine litter policy officer of Seas At Risk, said that more remains to be done: “Plastic has no place in personal care products, and this is a great first step to tackling this source of pollution, but voluntary agreements with a limited scope are not enough.

For the next step, it is vital that we secure European-wide legislation to ensure that all plastic is removed from products that go down the sink and into the ocean.”
 

Successful shareholder engagement on environmental and social issues helps companies improve both their financial performance and governance, showing that involvement that is “less confrontational” than hedge fund activism can achieve results, says a study co-authored by Elroy Dimson of University of Cambridge Judge Business School.

The authors find that environmental, social and governance “engagements” increase shareholder value when successful in changing company policy or actions, and do not destroy firm value even when such engagements are unsuccessful.
In finding that such engagement (particularly environmental and social) improve performance and governance, the study concludes that active ownership “attenuates managerial myopia” of the sort that focuses too much on short-term profit at the expense of long-term shareholder value and other stakeholders.

“This approach is differentiated from other styles of shareholder action, particularly hedge fund activism,” says the study. “Responsible investment initiatives are less confrontational, more collaborative and more sensitive to public perceptions; yet they achieve success.”

The study was co-authored by Elroy Dimson, Chairman of the Newton Centre for Endowment Asset Management at Cambridge Judge Business School, Oguzhan Karakas of Boston College, and Xi Li of Temple University.

The study is based on engagements by a large institutional investor (ranked in the top 100 globally for assets under management) that actively engages with companies in its portfolio via letters, proxy voting, email, phone and direct conversations with management. It looks at 2,152 engagements with 613 U.S. public companies between 1999 and 2009.

The study found that environmental, social and governance engagements generated a cumulative size-adjusted abnormal return of +2.3% over the first year following the initial engagement, and a +7.1% cumulative abnormal return for successful engagements over the first year, with returns gradually flattening out after a year. The success rate for engagements in this sample was 18%, and it took on average two to three engagements before success in achieving a change could be recorded.

Among examples of successful engagements cited in the study: Apple Inc. announced new environmental initiatives; Yahoo! Inc., following media attention related to China, announced new commitments to human rights and online freedom of expression; and Illinois Tool Works Inc. instituted a new corporate social responsibility report.

“To our knowledge, this study is the first to examine the impact of shareholder activism on environmental (E) and social (S) issues,” the study says. “After successful engagements, particularly those on ES issues,engaged companies experience improvements in their operating performance, profitability, efficiency, shareholding and governance.”

Similarly, new research from Alquity and Cass Business School finds companies with strong ESG disclosure are outperforming peers with an annual return of 9.4%, against a benchmark performance of 5.4%. The analysis of over 4,400 listed companies over the period 2011-2015, revealed that companies with strong and improving ESG disclosure in emerging markets realised an annual return of 9.4%, against the benchmark performance of 5.4%.

The research also found a marked increase in disclosure of ESG information in emerging markets. Emerging market companies have increasingly disclosed more ESG information over the last five years, as a means of attracting foreign investment with the greatest improvements in the Energy and Financial Services sectors.

The research concludes that ESG analysis is an effective tool in identifying winning stocks because companies with high and improving ESG disclosure provide better risk-adjusted returns, especially in emerging and frontier markets.

Alquity has called on the investment industry to understand the importance of ESG disclosure and noted that companies are reacting to higher levels of scrutiny from investors, regulators, commentators and the media following the global financial crisis. 

Roberto Lampl, head of Latin American Investments, said: “These results confirm Alquity’s view that greater transparency and disclosure of ESG criteria are vitally important in emerging and frontier markets where risks are greater due to less developed institutional oversight of businesses. Forward looking ESG provides investors with an indication of quality businesses, especially when the disclosure is voluntary.

“High profile disasters like BP’s Macondo crisis in the Gulf of Mexico and more recently the problems experienced by Volkswagen all point towards an increasing scrutiny of corporate behaviour.”
 

Ford in Europe is on course to achieve a reduction in energy usage, per vehicle produced, of 25% since 2011, following investments of £20m specifically targeting energy waste.

As a result, this year Ford says it will save about 800 gigawatt hours at its European plants – roughly the amount of energy used annually by a city with a population of 170,000, such as Oxford.

As part of the Ford Production System, a new energy management operating System is now deployed throughout Ford’s European manufacturing centres. Facilities in Cologne and Saarlouis, Germany, for example, have achieved International ISO 50001 status for their energy management and efficiency.

“Constantly finding new ways of saving natural resources is an important challenge for Ford, especially in an energy intensive industry such as car-making,” said Richard Douthwaite, manager, Energy Management, Ford of Europe.

“Recycling waste heat from factory paint ovens is just one of the creative ways we are reducing energy demand, helping us to lower the environmental impact of our manufacturing facilities around the world.”

The energy-saving measures include a system that recovers heat energy from the paint oven exhaust stacks and returns it as useful heat into the district water heating system. The system in Cologne has delivered 16 gigawatt hours since start-up in November 2013. A similar system is now operational in Ford’s Saarlouis plant and a further one is planned for its factory in Valencia, Spain.

The company is continuing its switch to low-energy LED lighting at its manufacturing facilities in Europe and it is also rolling-out the installation of an advanced automated building heating control and ventilation system at its factories. The hi-tech system allows Ford energy teams to remotely control – and even switch off – heating systems in individual offices, or areas that are not in use, within its plants. 

With the recent wrongdoings of the CEO of VW and numerous other tales of executive bad behaviour splashed across our screens and our broadsheets, it’s pretty clear that a business’s approach to leadership in today’s global corporate culture is in need of a rethink. An interesting observation from Ira Chaleff, the international best-selling author, speaker and consultant, caught my eye.

“This recent rash of corporate scandals is not solely a failure of leadership. It is equally a failure of responsible followership,” he says.
Drawing on his personal experience, history and the social science experiments involving obedience and authority at Yale and Stanford, he proposes a revolutionary look at how to create a culture where, rather than ‘just following orders,’ people hold themselves accountable to do the right thing, always.

“Just like the seeing eye dogs, CEOs need to master and embrace the critical skill of Intelligent Disobedience,” says Chaleff. “When the human gives an order that, if executed, will put the team in harm’s way, the seeing eye dog’s responsibility is to disobey. If we can train dogs to differentiate between when and when not to obey, why don’t we do this with humans?”

His book Intelligent Disobedience: Doing Right When What You’re Told To Do Is Wrong will make interesting reading.

The theme of leadership runs throughout this month’s issue. On p4, Alexandra Stubbings, co-founder and director of Talik & Co, the organisation development consultancy, discusses change leadership skills in light of recent events at Volkswagen.
“Creating a healthy business culture with ethical values truly embedded is a multi-year and on-going process. It demands visible and immediate punishment of bad behaviour but more importantly it requires the continual reinforcement of positive pro-ethical behaviours through multiple parallel strands. These include leadership development, symbolic senior management actions and whole organisation engagement activities, surfacing and communicating stories of positive change,” she says.

And on subsequent pages discussion around the newly prescribed Sustainable Development Goals (SDGs) centre on how business can take a lead in their delivery.

Talking to Tim Aldred, head of policy and research at the Fairtrade Foundation recently, he told me that the new goals – there are 169 different targets in all – are “hugely challenging, but right” and “perfectly possibly if we put our resources behind them.” He was heartened that they addressed human rights, environmental sustainability and poverty reduction more rigorously than in the Millennium Development Goals.

He felt that the SDGs are a great opportunity to take sustainable business mainstream: “They give common targets that business, government and civil society can work to. They’re not rocket science but a offer a slightly different way of thinking about things.” Admitting that things weren’t going to be easy, he said that the prize was enormous and instead of wondering at the scale of the challenge, business should see the SDGs as a moment to be optimistic and ambitious.

With that kind of leadership thinking, we may just get somewhere…

liz.jones@ethicalperformance.com
 

The unfolding scandals surrounding Volkswagen and FIFA reveal they have much in common, not only with each other but with many corporate scandals that have gone before. The fall-out follows a familiar pattern. Both saw immediate demands for the resignation of the institution’s head (although only one willingly obliged). Both are proving, as investigations progress, to involve far more than the isolated actions of a few ethically dubious individuals, writes Alexandra Stubbings, co-founder and director of Talik & Co,
the organisation development consultancy.


Often the first internal reaction in situations like this is to identify individuals to blame and then ‘excise’ them from the organisation. (Think Libor). All very well but what if the behaviour cannot be attributed to just one or two ‘bad apples’. What if the problem is deeper and more pervasive than that? What if the barrel itself is rotten?

The next level of response then is typically from the industry, with the intent to ‘close the loophole’ by tightening regulatory policies and enhancing compliance protocols. Unfortunately such a response is more likely to produce a compliance ‘arms race’ as innovative methods are found in turn to counter the new regulation. Witness the banking industry where more robust screening policies for customers have often been met with more ‘dynamic’ international workarounds. In all these instances as long as the underlying culture and values, the beliefs about what to prioritise and how to act, remain the same, nothing really changes.

In such circumstances how might Matthias Muller, new CEO of Volkswagen, go about changing the culture and values of the (currently) €50bn global company in any meaningful way?

He might start by not seeing the problem as a technical one. Sounds trite but too often we see engineers trying to apply a similar mechanical logic to leading their people as they do to producing widgets. From this mindset if a process can be reduced to a minimum (zero waste? zero defects?) standard the output will be the most efficient. The assumption is that behaviour change is the same. Hence the attraction of the ‘ethics’ workshop – often a one-day quick fix to remind staff how they should behave before sending them back to their desks.

Creating a healthy business culture with ethical values truly embedded is a multi-year and on-going process. It demands visible and immediate punishment of bad behaviour but more importantly it requires the continual reinforcement of positive pro-ethical behaviours through multiple parallel strands. These include leadership development, symbolic senior management actions and whole organisation engagement activities, surfacing and communicating stories of positive change.

The symbolic actions and stories illustrate to employees in the business and more widely to its stakeholders that positive behaviour is recognised and more critically rewarded. Conducting both the ‘soft and hard’ aspects of change in tandem serves to ensure the espoused values are supported by the company’s people systems and not experienced as inconsistent with them, a common cause of back-sliding.

Such change does not happen quickly. Consistency is key and the message has to be communicated many times at every level until it becomes part of the company identity. When it truly becomes ‘who we are’, and anything less than leads to being ostracized by your peers, you’ve probably made a good start.
 

Catch me on a bad day and I’m likely to be as critical as anyone of current formulations of Corporate Social Responsibility (CSR). Ironic, then, that I was invited to champion the ‘No’ side of the argument when a recent Barclays Debate addressed the question ‘Is CSR Dead?’ The event was chaired by Matthew Taylor, chief executive of the Royal Society of Arts—and it produced an unexpected outcome, writes John Elkington, co-founder & chairman of Volans.

 
The proposition that the CSR agenda is dead was advanced by #TeamMark: Mark Kramer of FSG and the Shared Value Initiative, and Janet Voûte, global head of public affairs at Nestlé. Tough competition. With the Volkswagen debacle hanging over our heads, it was hard to see this turning out well for #TeamJohn—featuring yours truly and, riding shotgun, Patrick Thomas, ceo of Covestro (the former Bayer MaterialScience).

When Matthew took an initial audience poll, it was calculated that the room was 51% to 49% in favour of CSR being alive—though the actual vote was a few points higher, to CSR’s advantage.

In summary, #TeamMark argued: While CSR is a wonderful concept, unfortunately the way it works in practice falls short. To create transformational change, where companies become vehicles for social progress rather than harm, you have to get to the core of the business, to the CEO, to the business strategy. CSR is very rarely aligned to the culture, purpose and fundamental strategy of the company.
They continued: We don’t have time to convince companies to bring in values that ought to be important but which are not yet truly valued by the market in financial terms. Shared Value says there is opportunity for real profit and improved bottom line by pursuing new avenues that address your environmental footprint and by developing products that meet social needs in the populations you serve.

And #TeamJohn’s response? CSR is a deep-rooted, ongoing conversation across sectors about the role of business in society. It has been with us for a long time already and, very likely, it will be with us for a long time into the future. That said, it certainly has its problems. You need only look at Volkswagen, or the Dow Jones Sustainability Index’s ranking of VW as a sector leader just days before the crisis hit. So does that wipe out the case for CSR? Hardly. A few failures are no reason to throw the baby out with the bathwater.

CSR is not dead, we concluded, but there is a big question about whether it is fit for purpose. Values tend to drift. Think about Barclays itself, with its founding Quaker values, but recent travails have impacted both reputation and the bottom line. At its best, effective CSR delivers Responsibility, Accountability, Transparency and Sustainability—but the lead has to come from the top.
I suspect many CSR professionals were on tenterhooks when the final vote came, feeling that the Shared Value agenda must have made up some ground. But when Matthew gave the results from the room and the online audience, we were stunned to hear that the needle had swung to 75% in favour of our ‘Undead’ position.

In truth, the question posed is one where Mark and I were probably aligned from the outset. I see Shared Value as having a crucial role [in what/for what]. But as an approach that stresses Win-Win outcomes, rather than Win-Win-Win (Triple Bottom Line) outcomes, it by definition fails to deal with the Win-Lose challenges that are shot through the wider sustainability debate.

So, inevitably, the debate continues.
 

The ratification of the Sustainable Development Goals in September was a pinnacle moment for the engagement of the private sector with the development community, writes Louise Erskine, head of Programmes and Research at Career Volunteer.

Extensive consultation with businesses at global and local levels in the run up to formalising the goals was, itself, indicative of the progress made since the inception of the MDGs in 2000. At that time, there were little soundings or structure around the role of the private sector in achieving the MDGs and the goals practically ignored the parallels between sustainable economic growth and businesses.

Attitudes and actions have evolved since the nascent stages of the MDGs: it is now widely recognised that the fundamental way to drive the SDGs is through integrative approaches that address systemic issues. The private sector is finally accepted as a pivotal actor and facilitator of change within these cohesive partnerships.

UN Global Compacts’ depiction of shared values highlights the synergies between the SDGs of inclusive growth, social equity and progress and environmental protection with long term business goals of revenue growth, resource productivity and risk management. Concurrently, the UN Development Programme highlight that inclusiveness, sustainability and partnering are the cornerstones of private sector engagement. 

This is where corporate volunteering is key. Corporate volunteers have become somewhat superfluous to needs in recent times - delivering teams to build wells and paint schools whilst snapping up a photo opp have, sadly, become entrenched in the global development arena. Building capacity through grassroots development was misconstrued as a one-way flow of learning and transference. 

Yet the dependency debate has long since died and the time has come to address actual need and a shift away from normative ad hoc, unskilled transference of labour in a unilateral system. Acceptance that shared values don’t necessitate shared motivations is creating a landscape for corporate volunteers to impact on many of the key SDG fields, such as financial inclusion, governance frameworks, access to technology and resource sustainability. 

Deploying volunteers to learn about these aspects, particularly around innovation and industrialisation, helps to foster technological advancements as well as research and development. Businesses that are engaging in such a way are discovering research into new markets, opportunities for risk management, innovations with their products and services and, subsequently, increased confidence and loyalty amongst their customers and shareholders. 

The SDGs have inadvertently become a nexus to stimulate, inform and inspire the private sector to harness their human resources and expertise. The concept of reciprocal benefits is no longer as indecorous as it once was and, together, this paves the way for a new movement of corporate volunteers; one based on a mutual appreciation and understanding that will radically alter corporate engagement in developing and newly industrialised countries. Corporate skilled volunteering has the propensity to drive a transformative agenda in the post 2015 era. ‘Should we’ is no longer the nuanced question: ‘how do we’ is the new norm.

 

As part of its ongoing Journey to Sustainable Luxury project, Chopard, the Swiss luxury watch, jewellery and accessories company, recently teamed up with Eco Age, a brand consultancy that helps businesses grow by creating, implementing and communicating bespoke sustainability solutions, for its first jewellery range made from fair-mined gold. The Palme Verte collection – inspired by and named after the Cannes Film Festival Palme d’Or award – is crafted from fair-mined 18-carat yellow gold, and features a ring, earrings, necklace and bracelet (with prices ranging from £1,550 for the ring to £7,000 for the bracelet).

The Journey to Sustainable Luxury project was launched two years ago in Cannes, and resulted in a partnership with the Alliance for Responsible Mining in South America, whereby Chopard supports communities with fair-mining projects, not just buying their fair-mined gold. More mining communities have been certified ‘fair mines’ as a direct result of the partnership.

Other big brands also push their sustainability credentials. Earlier this year Tiffany, the prestigious ‘little blue box’ jeweler appointed the company’s first-ever chief sustainability officer, Anisa Kamadoli Costa, with its stated aim “to elevate the company’s sustainability strategy and accelerate progress against its social and environmental business objectives.”

Over the last 12 years, Costa has played an integral role in developing Tiffany & Co.’s corporate responsibility programme. Through her efforts, the company says that it has embraced a collaborative and stakeholder-driven approach to sustainability that includes engaging with civil society, mining companies, the luxury industry and local communities to shape best practices across the sector.
Under her guidance, the company has increased public awareness about environmental concerns such as the proposed gold and copper mine in Bristol Bay, Alaska. In addition, Costa established the company’s CSR metrics programme and process of external reporting, which has gained wide recognition for its quality and transparency.

Given that precious metal supply chains can be long and complex, it is not surprising that consumers – and retailers – traditionally knew little about the origins of the precious materials contained in their jewellery. Today that is changing dramatically. And smaller brands are making their presence felt.

Indeed, at last month’s London launch of the first ever supply of Fairtrade gold from Africa – it has previously only been sourced from South America - Josephine Agutta, addressed the audience and brought home the realities of life in artisanal mining today.
Agutta began working in a gold mine in Uganda at the age of 12. As the eldest of nine children, she was charged with fending for her family. “Before this Fairtrade project started, we were just dying in silence,” explained Josephine “We struggle to mine this precious metal - it’s a hard life, you work the whole day. It’s not easy. We’ve lost men, women and children in mine collapses – this is where the precious gold you wear comes from.”

She went on to tell about how her community had only recently learnt about the dangers of the mercury they commonly use in gold extraction through the Environmental Women in Action for Development (EWAD), Fairtrade Africa’s partner.

“When we were told that mercury was poisonous the whole room fell silent – we just didn’t know! We used the same bowls and ladles for cooking as we used for mining – pregnant women handled mercury with their bare hands.”

With one ton of ore, only resulting in 30g of gold, the amount of hard, dangerous work taken on by artisanal miners is phenomenal and artisanal mining is the second largest provider of livelihoods worldwide after agriculture.

According to Alan Frampton, of Fairtrade gold wholesaler and ethical jeweler CRED Jewellery, our desire for precious metals keeps 90m people in poverty. “We are all co-responsible,” he said.

He compared the jewellery industry to the grocery industry several years ago. “It took Justin King, then ceo at Sainsbury, to turn things around in grocery sector. This is what we’re trying to do in the jewellery industry. We have lots of independent retailers and supply chain management can be woeful. But we are trying to change things. Responsible supply chain management is the way forward.

“Fairtrade gold sales are one of the fastest growing areas in the jewellery industry, which is being driven by consumers as more people become aware of the choices available to them. 2015 has seen an explosion of media interest in Fairtrade gold products and the stories associated with it.”

Frampton is adamant that consumers want to know where their gold comes from. Judith Lockwood of Arctic Circle Diamonds and the Hockley Mint, both Fairtrade businesses, agrees. “Once the idea of Fairtrade is mentioned during the sale of a wedding or engagement ring, price doesn’t come into it. A 10% premium is nothing.”

Lockwood has seen for herself the difference Fairtrade accreditation of an artisanal mine makes. Some of the differences sound ridiculously basic to Western ears but signs like ‘Only People Employed by the Mine’ (restricting access) and ‘No children allowed’ are a huge step forward. The mine that Lockwood visited earlier this year in Tanzania has seen Fairtrade standards insist that the shaft is lined in hard wood, not the local soft wood, which lessens the risk of collapse. Also the area where the dynamite is stored is now sectioned off and protected.

Up until now, consumer awareness of Fairtrade gold has been as limited as the supply of gold. But the progress made by Fairtrade International in bringing more mines up to the standards required for them to gain Fairtrade acceditation means that there is now the possibility that any customer can walk into their local jeweler and commission a piece of jewellery made with Fairtrade gold. As more consumers ask for a Fairtrade alternative, the possibilities to provide real benefits and opportunities to more artisanal mining communities increases.

Just like it took years for the mainstream tea industry to go down the ethical trading route, the advent of Fairtrade gold from Africa could well prove the turning point for the jewellery industry…with tea-drinking Brits leading the world. 

 

Picture credit: Wedding Rings from Cred Jewellery, which has been at the forefront of ethical jewellery since it used the first ethical gold in 2004, brought in from a mining cooperative in Columbia called Oro Verde.

The launch mid this October of the BlackRock Strategic Funds’ (BSF) Impact World Equity Fund, a liquid UCITS fund that aims to invest in “measurable” social and environmental outcomes, has been described as a new investment strategy will help move impact investing from a “niche to a core allocation.”

BlackRock, a global leader in investment management, risk management and advisory services for institutional and retail clients with assets under management (AUM) of US$4.721 trillion (June 30, 2015), is well known for its financial products including iShares (ETF’s) and mutual funds.

Now the new BlackRock fund, which will typically hold between 200 and 600 individual companies sits alongside other recently launched impact funds by the firm for US and Japanese investors, aims to generate “competitive financial returns” whilst meeting investors’ social and environmental concerns.

The fund’s launch comes as sustainable and impact investing strategies have been receiving a significant amount of interest and assets from investors. It should nevertheless be noted that ‘impact investing’ is a small but vibrant segment of the broader sustainable and responsible investing universe.

According to the Global Sustainable Investment Alliance (GSIA), a collaboration of sustainable investment organizations, sustainable investment assets expanded 61% between 2012 and 2014. It has defined impact investing as ‘targeted’ investments aimed at solving environmental or social problems.

Deborah Winshel, md and global head of impact investing at BlackRock, commenting said: “Demographic shifts, stakeholder advocacy, and government regulation are combining to create unprecedented demand for sustainable and impact investment solutions.”

She added: “Impact investing enables investors to do more with their money than simply achieving a financial return. Through transparent measurement and outcome reporting, impact investing allows investors to better understand how their money is being put to work.”

The latest fund, which is run by BlackRock’s Scientific Active Equity (SAE) team with over 30 years of experience leveraging systematic and quantitative techniques to build differentiated equity portfolios, seeks to deliver a portfolio that provides exposure to companies with a “positive measurable societal impact” whilst considering risk and returns.

SAE employs research processes to score more than 8,000 companies daily across three societal impact outcome areas: (1) Health; (2) Environment; and, (3) Corporate citizenship. In addition, the fund screens out certain companies or industries, including alcohol, tobacco and weapons manufacturers.

“This new investment strategy will help move impact investing from a niche to a core allocation,” said Jeff Shen, co-head of BlackRock’s SAE Investment Group. “We have designed a portfolio that combines innovative investing capabilities with a transparent and tangible set of social and environmental impact outcomes.”

The development of the new fund is claimed to further highlight BlackRock’s “commitment” in the space. The firm currently BlackRock manages in excess of US$200bn (c.£130bn/€175bn) of assets across environmental, social and governance (ESG) portfolios as well as impact investments.

GSIA’s research has also highlighted that while institutional investors currently account for 86.9% of global sustainable by AUM, increasingly women and millennial investors are placing a greater emphasis on sustainability and social impact in their investment decision making.

Evidencing that trend and according to the Morgan Stanley Institute for Sustainable Investing, 76% of female investors were found to believe that environmental or social factors are important considerations when making their investment decisions.
BSF’s Impact World Equity Fund’s standard retail ‘A’ share class has a minimum investment of US$5,000 (c.£3,243/€4,370), an initial charge of 5% and a management fee of 0.8%.

For more information on BlackRock Impact click here.