At Aneuvia, we believe in democratizing financial wellness and investment advice for the betterment of companies, communities and individuals. Here we share our insights, point of view and advice on global impact investing, corporate diversity and inclusion, new financial market trends, impact investment funds and more.
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It’s become very easy for companies to merely associate with causes. Whether it’s posting a black square on Instagram in support of Black Lives Matter or creating a branded hashtag in support of climate change, cause marketing - the idea of supporting a cause - doesn’t necessarily suggest impactful activism, which is more about actively contributing to positive outcomes. Ultimately, businesses often talk ‘purpose’ without following through with action, and this is labeled as “impact washing,” “greenwashing,” or “slacktivism.”
The cost and backlash of ‘purpose hypocrisy’ are greatest to those who fail to acknowledge it. Today’s consumers are paying more attention to how brands respond in times of crisis. 46% of consumers report paying more attention to brand communications than they did pre-COVID. And silence comes with a price: 56% of consumers say they have no respect for businesses that remain silent on important issues (Edelman Trust Barometer).
This begs the question, “How can investors assess which investments are impactful enough?” In our latest whitepaper, we discuss the power of transparency to mitigate the possibility of “impact washing.’ The following four factors are key in helping investors decide whether their public equity investments are impactful enough:
- Intentionality: Frame the problem that you are solving for and demonstrate an intention to generate positive social or environmental impact through investments.
- Additionality: Seek to produce beneficial social or environmental outcomes that would not occur if not for the investment. Be consistent - and don’t capitalize on ‘moments in time’ - to demonstrate ongoing value.
- Active ownership: Engage with investee companies to improve ESG or impact-related disclosures, mitigate negative impact, and drive positive impact in communities through activism.
- Impact measurement: Commit to measuring progress and report regularly on social and environmental performance of impact investments.
The opportunity is bigger now than ever before, particularly as people look to businesses to create positive change. However, it is equally important that companies take action on the issues that they stand for, as opposed to the slacktivism of proclaiming mere association. The world is waking up to hypocrisy by calling out such companies and investors who claim purpose, but lack action. So, as investors, it’s important to signal the difference between trust and transparency.
It’s becoming clear that the effects of COVID-19 are here to stay long-term. Add to that the continuing issues of racial inequality, the increasing polarization of American culture in the run-up to the upcoming presidential election and the most recent wave of climate-change driven natural disasters, and it’s becoming increasingly clear that America’s road to recovery will be a circuitous path versus a straight line.
COVID-19 has turned into an inflection point. Not only is the crisis reshaping the ways we live, work, and socialize; but it’s also leading us to reevaluate fundamental issues of economic, social and racial equality – and the role of corporations in shaping progress on those issues.
83% of executives today feel an urgency for business to be a critical part of driving solutions to some of today's most pressing issues — including COVID-19, racial injustice and economic resurgence, according to the 2020 Porter Novelli Executive Purpose Study.
One particular example is the Black Lives Matter movement, which propelled many companies to step up and voice support for justice, reform and equity. This would have been considered a risky business move many years ago. But, today, due to the increased polarization of our country, even the most apolitical household companies have taken an explicit stand on issues like human justice, gun control, immigration, and women’s rights. Corporations that used to stay publicly silent, out of fear of alienating their customer base, now have a business, moral and financial imperative to speak up.
In our latest whitepaper, we discuss the importance of businesses having a positive impact on society and taking an inclusive approach in order to avoid reputational risk, but also to venture into unexplored business domains. The adverse effects of material issues such as climate change, gender inequality, financial exclusion, and resource scarcity are a wake-up call to stakeholders and shareholders, alike. Our view at Aneuvia is that sustainable, equitable investing not only increases intrinsic value, but also produces greater financial returns. In today’s competitive landscape, diversity and inclusion isn’t an option, but an imperative.
View our latest whitepaper for more on sustainable and impact investing.