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Businesses can build sustainability programs that make financial sense

The white paper from UBS Chief Investment Office Wealth Management’s: “Business with impact” reports on a new paradigm emerging in today’s business models, they report that companies are moving from “corporate social responsibility” to “corporate societal returns”. They believe that companies can make money and be socially responsible at the same time, just like James Kelly Pearson’s corporate treasurer pointed out in his description of their sustainability programme. 

Firms need to re-think their sustainability strategies

UBS accept that businesses are under pressure to make money and benefit society at the same time and list several reasons, but they believe that firms need to re-think their sustainability strategies because there are opportunities to ‘go round’/avoid the principal ‘blocks’:

  • Operational risks can be business liabilities…or opportunities
  • External (regulatory) requirement pose risks…and offer opportunities to boost reputation too
  • External pressures for long term sustainable business models, e.g. Pearson’s 
  • Internal pressures.

Their plan

Not surprisingly UBS Chief Investment Office focuses on investment as the driver for sustainability programmes. They believe that “Businesses can build on sustainability programs to develop impactful strategies that make financial sense, and also generate positive outcomes for society.” They describe how:

  1. How to become a “business with impact" through collaboration: Collaborate internally and work with other businesses to test impactful business strategies, meet client demands, and overcome internal constraints
  2. Learn how to invest on a long-term basis from sustainability-focused clients and investors: Businesses can draw upon a wealth of expertise from their clients, investors, and other stakeholders in their efforts to move their business models from managing sustainability risks to adopting a "business with impact" approach.
  3. Draw on private businesses and family offices to incorporate social and environmental returns into operations in a scalable way: Family offices frequently have longterm, multi-business-cycle investment horizons. This contrasts with some of the short-run profitmaximization pressures that businesses cite as reasons against adopting a "business with impact" operating model.
  4. Learn from impact investors and their successes in overcoming operational constraints, and the challenges they face in scaling up their activities: 
  5. Use networks to bring "business with impact” into the mainstream: many institutions, investors, and individual stakeholders are empowering firms to target both financial and social returns. Some of the constraints to adopting such a "business with impact" approach include insufficient internal resources, or insufficient crossdivisional communication within businesses.

CTMfile take: UBS are bankers to some of the richest people in the world, this report has some really important case studies and insights. Worth a browse at least.


This item appears in the following sections:
Investing
Investing Short-Medium Term Surpluses
Sustainable Green Treasury
Sustainable Business Models
Sustainable Investing

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