I went to a sustainability conference last week held in Singapore by BNP Paribas and my first thoughts, after a day which included such highlights as Cherie Blair talking about advancing women’s equality in the corporate world and former world tennis number one Chris Evert about her days as one of the first superstars of women’s sport, were about how much longer such conferences can be convened.
I say that because so many of the topics discussed are fast entering the mainstream that sustainability as an overarching theme is losing its novelty value.
That can only be a good thing, and what struck me as the great and the good of the corporate social responsibility world set out their stalls was that, although a few of the pitches were inevitably of the doom-and-gloom variety, a lot were refreshingly - and surprisingly - upbeat.
The bleakest take on our future prospects without the sustainability drive was a pitch from Tony Simons, director general of the World Agroforestry Centre, that deforestation must cease. The steady removal of trees threatens to bring an end to the “anthropocene” era. In other words, the planet will become uninhabitable and the earth’s period of playing host to human beings will come to an end.
A rather charming and amusing lady called Tessa Tennant, co-founder of the Association for Sustainable & Responsible Investment in Asia and a veteran of sustainable development causes, made the most optimistic case.
She observed that 30,000 solar panels are being installed globally every hour and the price of renewable energy, which used to closely track crude oil, has decoupled, causing clean energy prices to plummet.
But the other sobering observation was that this year is likely to be the first in over five million years - a lot of the pitches at the conference tended to have a longer time horizon than your typical investor briefing - when average CO2 levels have been over the 400 parts per million level, which means we are in a new and deeply worrying era in terms of global warming.
A DIRECTOR FROM asset management giant BlackRock spoke fascinatingly of the challenges of investing in Asia, where many of the biggest companies are family-controlled and often in the grip of aging patriarchs, a subject I have written about in this column.
She raised another piece of merriment when she revealed her experience with the profound incompetence of “independent” directors who are placed on boards seemingly to make the right noises about diluting family influence in Asia. Apparently there are some horror stories there.
But BlackRock is mainly a passive, ultra-long-term investor and, as she pointed out, it’s in their interest to partner with families on Asian boards since, as she put it, “they’re not going to sell and neither are we”.
Another observation which is a key marker of the corporate culture in Asia is that good corporate governance is often regarded as principally a compliance issue rather than having its own intrinsic value, or indeed as something which can generate superior returns and create shareholder value.
Indeed it took me back to the 1990s and the infamous Al Dunlap, better known in the corporate raiding world as “Chainsaw Al”. You might recall this sobriquet derived from his habit of taking the reins of a company and proceeding to fire just about everybody in the interests of delivering shareholder value.
But that was a different era. If the tone of last week’s conference was anything to go by, that time has definitively come to an end - much like the Devonian era millions of years ago that preceded the evolution of humanity, as we heard in the deforestation pitch.
THE CONFERENCE ALSO discussed how individuals increasingly want to work for companies which score highly on the key ESG markers. It seems Chainsaw Al would have difficulty recruiting for his “deforested” companies in this day and age for that very reason.
Another fact is that numerous academic studies have demonstrated that companies which tick the ESG boxes deliver superior financial performance on many measures, not least in terms of stock performance relative to companies which tick few boxes.
So those companies which view the matter as simply one of bland compliance have the wrong long-term strategy. And, interestingly, only two major industrialised countries have made ESG reporting mandatory - France and China. That’s not what we are supposed to think about the Chinese model of capitalism. But then, this is a whole new era.