Overview of Yearbook articles

Each year we publish a series of articles to accompany the industry results contained in the Yearbook. This year’s edition of The Sustainability Yearbook focuses on social capital issues — the “S” in ESG. Sandwiched between Environmental and Governance — “S”, which measures sustainability’s social dimension, is sometimes overshadowed by the attention afforded to its sustainability siblings. This is perhaps understandable given the devastating impact of environmental pollution and the climate crisis on a global scale (measured by E), combined with a preference of the investment community for metrics that focus on company leadership, board oversight and executive compensation (measured by G). But the significance of the social dimension in sustainability investing is rapidly escalating. This past year especially, social sustainability issues have grabbed their fair share of headlines.

Fair Wages – a key to effective social capital management

February 2019

Sustainability is more than climate change and protecting fragile environmental ecosystems, it’s also about protecting the social fabric of which society is composed and supported. This means going further than meeting the bare minimum in wage levels required by law and embracing the concept of fair wages. Fair wages are those that cover the real cost of an employee’s basic needs while also respecting the economic constraints of employers. Moreover, for many industries this involves not only evaluating their own wage practices but also being a “fair-wage” champion and resource for the companies within their supply chains as well.

Professor Daniel Vaughan-Whitehead

No Firm is an Island: using the SDGs to bridge modern portfolio management to the future

February 2019

Companies don’t operate in seclusion; they are part of a larger inter-related system made up of variables that interact in unpredictable ways. Yet, traditional models used in portfolio construction do not sufficiently account for companies’ interaction with, and impact on, other firms, actors and variables within the system. 

These impacts can have serious and far-reaching consequences for both the business ecosystem and society. When viewed in the long-term, many un-sustainable companies are, at present, over-valued and many sustainable companies under-valued. 

The SDGs provide a useful framework to help companies and investment managers implement a systems-thinking approach that considers the impact of decisions on future resources. Company performance assessed holistically in this way safeguards portfolio returns by better synchronizing the short-term assets with the long-term liabilities of universal asset owners. 

Michael van der Meer 

CFA, Senior SI Analyst, 
Emerging Markets, 

Slowly but surely: gradual progress towards gender equality

February 2019

Gender diversity enhances corporate governance, talent attraction and human capital development which fosters superior value creation not only within companies, but also for stakeholders and society. Corporate policies promoting gender diversity are a reflection of a well-managed company that realizes the value of multiple perspectives in minimizing risk and driving long-term competitiveness. Token female appointments are not the goal, but rather effective leadership. 

Gender diversity can only be achieved by promoting gender equality, not in terms of quotas or inaccurate measures of outcomes, but by addressing the social and cultural stereotypes that have limited women’s ability to maximize professional opportunities.

Jacob Messina

CFA, Head of SI Research

Markéta Pokornà

SI Research Associate

Five Years of Pushing for Change: Assessing Corporate Tax Strategies

February 2019

Though it lacks the magnitude of climate change, the excitement of technological innovation, and the visibility of gender equality, a company’s approach to its tax obligations is nevertheless a critical element to consider when evaluating a company’s sustainability profile.  

Sustainability in business can be defined as the policies and practices which companies implement not only to adapt, grow and thrive in the future but also to avoid diminishing the resources available for present and future generations.1 Taxes are the means with which communities and countries build the physical, social, and educational infrastructure needed to support present and future growth and development.

Eleanor Willi

Sustainability Specialist,
ESG Ratings

1 World Commission on Environment and Development, 1987, General Assembly of the United Nations, http://www.un.org/en/ga/president/65/issues/sustdev.shtml

Articles – Yearbook 2018

The Good, the Bad, and the Ugly: Corporate Policy Influence under scrutiny in the age of SDGs

January 2018

The ability to petition political leadership is a key component of modern democracy. Corporations are essential contributors to political discourse as they provide policy makers with important industry-specific perspectives and information, and can be strong voices supporting policy that improves economic and social welfare. However, corporate policy influence can also lead to economic inefficiency, environmental degradation, and the loss of human health and life. Moreover, public awareness of the misuse of influence and distrust of corporations is on the rise. The popularity of the UN’s 17 Sustainable Development Goals (SDGs)as a tool by governments and shareholders will increase the importance of public-private sector discourse as a vehicle for information sharing and idea generation. A bounty of benefits awaits companies that use their channels of influence for positive impact for communities and society. The opposite awaits companies that use policy influence for deliberate self-interest.

Jacob Messina, CFA

Head of SI Research

Eleanor Willi

Sustainability Specialist

Capitalism coming of age: using the SDGs to bridge business strategy and social responsibility

January 2018

Corporate Social Responsibility (CSR) has evolved from an ad-hoc feature to a strategic imperative for corporations. A well-defined and aligned CSR program can help companies articulate an overarching purpose that motivates employees, inspires customers, gratifies shareholders and advances society. The UNs Sustainable Development Goals (SDGs) provides a useful framework to help companies target and align their CSR programs with the economic, social and environmental needs society and investors value most. Our analyses of corporate philanthropy and citizenship practices shows that companies already recognize the need to address SDGs and are using  their CSR programs to apply, advance and report efforts. However, stronger metrics are still needed, especially for companies and stakeholders to fully maximize impact.

Roland Hengerer, PhD

Senior SI Analyst

Putting commitment into practice in financial services

January 2018

Through their ability to deploy capital to support sustainable initiatives that support short-mid- and long-term economic development, financial institutions are critical players in making the world more sustainable. In addition, they provide institutional and retail clients with access and education on sustainable financial products so they too can contribute to the causes they value while earning a financial return.
We spoke with BNP Paribas’ Laurence Pessez and BNP Paribas Fortis’ Guy Janssens to get a closer look at how one major bank and asset manager is using its global presence and local expertise to advance the cause of sustainability with customers in home markets in the Eurozone and within financial circles around the world.

Guy Janssens

Head of Sustainable and Responsible Investments  BNP Paribas Fortis

Laurence Pessez

Global Head of Corporate Social Responsibility BNP Paribas Group

2 Information on UN Sustainability Goals is available at http://www.un.org/sustainabledevelopment/development-agenda/ 

2018 Annual Corporate Sustainability Assessment

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