Nov. 26, 2021 "Three ways to figure out whether a company is really invested in change": Today I found this article by Martin Pelletier in the Financial Post:
Martin Pelletier: Companies looking to change the world have to put their focus on their employees and keep it there
There has been a lot of interest over the past few years on environmental, social and corporate governance (ESG) investing, but, truth be told, I’ve found few really know what truly defines being an ESG-compliant company, other than in the sectors they operate in, and it’s often too easy to simply adjust one’s marketing materials.
There has been much talk of integrating ESG into a company’s reporting standards as they do with corporate compensation,
but payout models haven’t really changed that much for senior management despite the increased disclosure.
This doesn’t mean we don’t believe in the power of investing in positive change, but there must be a better and more effective approach than the status quo.
There also remains a tremendous economic incentive since those companies that genuinely embrace a socially responsible way of operating will be highly disruptive to those remaining under the old shareholder maximization model and they will ultimately make the world a better place.
There is no better way to do this than focusing on employees, just like Henry Ford did when he got started.
For example, few know he implemented the $5, eight-hour day in 1914, which was double the industry pay for less work.
However, his need for top-down control of Ford and his stubbornness ultimately led to the company being disrupted by more stylish and comfortable cars such as the Chevrolet.
It is no different today: companies looking to change the world and make it a better place have to put their focus on their employees and keep it there.
This can be a difficult thing to do since we’ve all been taught the client is always right and the shareholder is the boss.
A socially responsible company is one we like to call open source. It is characterized by happy and motivated employees who see themselves as part-owners and, therefore, genuinely feel responsible for the future direction of the company.
As a result, they will often treat clients as if they are their own, which is in stark contrast to the traditional hierarchical structure layered with inefficiencies and riddled with ego.
Ego is a real company killer and much more of a threat than outside competitors. More so, ego can lead to unethical behaviour, because self-interest and office politics become ingrained within the company’s culture.
If you’re wondering what an open-source company looks like, here are three ways to verify.
Bench strength and open communication:
The company’s frontline staff should be highly competent and entrepreneurial in nature,
and highly valued and respected by the organization.
They are also fully supported by other equally valued employees who may be less entrepreneurial in nature, but are still able to recognize the importance of getting to yes instead of taking the easy path to no.
Employees are also the ones who know the changes a company needs to make in order to stay on the cutting edge.
Therefore, it is important to have processes in place to ensure people feel they’re being heard and that they’re comfortable sharing ideas right to the top.
Empowerment and ownership: I really believe most people will make the correct choice between right and wrong when they understand there is a level of trust being placed with them.
This means empowering them to say no to bad business or turning down potential business that would compromise doing the right thing, such as creating a conflict of interest or self-dealing.
All employees should be participating in the success of the firm, so make them shareholders and you might be both surprised how loyal they are and be impressed with the decisions they make.
No middle management: Open-sourced companies never have a mid-layer of management with bosses upon bosses. They have tiers of support, not management.
Once a mid-level structure is added as a means to manage a company’s rapid growth because “it’s the way it’s always been done,” it is game over. You’ve just become the very thing you were created to disrupt.
Maybe we need to eliminate ESG altogether and move to an employee-centred open-source model instead. This would be more difficult than a top-down, ego-driven structure that can virtue-signal away its actual ESG responsibility.
But if you really want to change the world, why not start with those lives you can directly impact and trust them to make the right choices for both the company and society?
This is certainly one most of us in the investing world would much prefer to invest in and support.
Martin Pelletier, CFA, is a senior portfolio manager at Wellington-Altus Private Counsel Inc, operating as TriVest Wealth Counsel, a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax, estate and wealth planning.
Three ways to figure out whether a company is really invested in change | Financial Post
Sept. 8, 2023 "‘Woke’ ESG regulations leading to policy chaos with worst yet to come": Today I found this article by Terence Corcoran on the Financial Post:
In an underground retail passage leading to the Toronto subway at the intersection of Bloor and Yonge — a retail row owned by Brookfield Properties — many of the stores sit in post-COVID shutdown. To fill some of the empty window space, Brookfield has erected a billboard. Instead of erecting a “For Lease” sign, the billboard calls on subway passengers to join in “BREAKING THE PLASTIC HABIT.”
Commuters are asked to scan a QR code so they can promise to “Skip the plastics.” The scan opens on a page that says “Take the pledge!” by ticking a box that says “I pledge to Break the Plastic Habit” and another that says “My workplace pledges to Break the Plastic Habit.”
How cheap and easy it must be for a global real estate company to take public shots at the plastics industry, especially for a company like Brookfield Properties, a subsidiary of Brookfield Asset Management, which is chaired by Mark Carney, former central banker and leading global proponent of corporate adherence to strict environmental, social and governance (ESG) practices.
Plastics have been a Blookfield ESG target for years. Along with the world’s biggest asset managers and corporations, from such trillion-dollar giants as BlackRock to Canada’s major banks and down to airlines and Liberty Gold, a 30-cent-a-share mining company, the investment world has been churning out millions of pages of feel-good reports on how they are managing their way through a labyrinth of often unmeasurable aspects of their operations.
That easy PR part of ESG, labelled as “woke” by some and “greenwashing” by others, is coming to an end. Even BlackRock CEO Larry Fink seems to be turning his back on the ESG crusade. A Google news search of ESG produces a rundown of stories: the end of ESG boom; ESG blocks investment flows; institutions struggle with ESG metrics.
That struggle is set to turn into a regulatory nightmare as governments, financial houses, corporations and regulators attempt to create international standards to document and measure business operations that are largely unmeasurable.
The ESG regulatory hurricane is sweeping across Europe, North America and Asia. The U.S. Securities and Exchange Commission issued new ESG disclosure guidelines in July that would require domestic and foreign registrants to report climate-related information.
Many corporations already do some of this, but coming soon is the need to document what is called “Scope 3” carbon emissions. In short, corporations will soon be forced to report not only on their direct carbon emissions but on “all indirect emissions … that occur in the value chain of the reporting company, including both upstream and downstream emissions.”
Scope 3 emissions targets are a product of the Greenhouse Gas Protocol Corporate Standards (GGPCS) regime, which is only one small aspect of an alphabet soup of rules that’s about to drown corporate managers and investors. There’s no space here to attempt to explore the whole global scene, even if I did understand it, but a good starting point is to look at the growth of regulatory acronyms.
ISSB: The International Sustainability Standards Board is developing standards “in the public interest” to install a high-quality, comprehensive global baseline of sustainability disclosures focused on the needs of investors and the financial markets.
A key ISSB player is Richard Manley, the Canada Pension Plan Investment Board’s chief sustainability officer. He heads the ISSB’s investor advisory group.
CSRD: The Corporate Sustainability Reporting Directive requires Europe’s companies to report on the impact of corporate activities on the environment and society, and requires a fully audited assurance of reported information.
ESRS: European Sustainability Reporting Standards were adopted July 31 and require reporting on sustainability-related impacts, opportunities and risks under the CSRD.
These include a full range of environmental, social and governance issues, including climate change, pollution, biodiversity, ecosystems and resource use.
Workforce human rights reports include a company’s own workforce (social protection, persons with disabilities, work-related ill-health, and work-life balance). All these data points are included in ESRS.
ESG is a massive regulatory and corporate reform nicely described by Stuart Kirk, a former HSBC responsible investing executive, as “death by fatuous and incomparable data.”
One thing is certain about ESG regulatory reform: Taking the Brookfield Plastics Pledge was the easy part. The worst is yet to come.
• Email: tcorcoran@postmedia.com
Thanks for the enlightening article on the anti capitalist woke cults unseen undemocratic unilateral imposition of its agenda on our world.
The plastics ban seems to have little to do or effect their main shrill alarmidt global warming/ life extiction threat ,will cost billions at the exprnse of other basic human needs ,and looks unlikely to succeed in its objective.
Like failed Defund the Police campaign,( causing a record increase in crime), or the anti oil csmpaign( causing spike in gas prices and impivereshing inflation,), the fanatical woke cults policy drives and influence has a track record of harm and injustice to humanity.
We need to liberate our nations from the woke cult tyranny while we can.
Sounds like sponges to soak up all of the country’s unemployable. Value-added jobs are becoming rare. Believe what I believe and I’ve got a paycheque for you.
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