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Investing on purpose

June 18, 2019

Business leaders are increasingly realising the cost of their companies’ environmental footprints, the commercial opportunities in joining forces with disadvantaged communities, and the innovation that comes from building their product around solving society’s most pressing issues. Investing in shared value is making their enterprises stronger – and investors themselves are taking notice.

This growing interest in dual financial and social returns raised a timely and vigorous panel discussion at the 2019 Shared Value Summit’s Investing on Purpose breakfast yesterday morning.

The event, held at the Sofitel Darling Harbour in Sydney, was attended by more than forty of the Asia-Pacific’s most senior leaders in the investment sector. It was guided by Shared Value Project Chair, Peter Yates.

Participants discussed the impact this trend is having on the relationship between investors and the investor relations sector, whereby the conversation has changed in recent years.

Novartis Head of Social Innovation & Strategy, Michael Fruest, said: “The conversation around investment used to focus on risk, rather than opportunity; or shared value.

“My advice to asset managers now is not to wait until you’re asked about shared value, but to take responsibility for bringing it into the conversation. No CEO would wait to talk about the PNL. Shared value or how a company drives social impact should be treated the same.”

The panel commented on the importance of providing investors with key metrics around the positive contribution they are making to society.

“Providing a visible correlation between good financials and social impact is vital,” Mr Fuerst said. “It’s not about having a glossy purpose statement or how purpose is framed on a company’s website. It’s whether they are genuinely solving societal issues.”

He continued: “Measurement is a big issue, and the [purpose] industry needs to be much more professional in how we do this.”

Unreasonable Group CEO Daniel Epstein added: “What you are seen to measure as a company is an indicator of what you value.”

Today, major investors like Blackrock are reaping the benefits that come from investing in shared value; including portfolio diversification, risk mitigation and superior returns.

With so many issues to get behind nowadays, BlackRock Director and Product Specialist, Iris Davila, spoke to how large investment institutions must be nimble in their approach.

“It’s not for us to tell our clients what to invest in; it’s to be responsive to their needs,” she said. “We’re committed to helping investors to fulfil their purpose, but we don’t impose our values onto them.”

Phil Harkness, CEO and Managing Partner of Mutual Trust, which sponsored the breakfast, told the audience that shared value was the “biggest single thought [he has] ever been exposed to”.

“If the entire market adopted shared value, we could lift the world out of poverty,” he said. “Meanwhile, it’s also a competitive advantage for business; making the shared value business strategy a whole new weapon for success.”