The Holy Grail of CSR

The way we do business, and the impact we make as we do it, defines our identity, just as much as the bottom line on our companies’ balance sheets.

Plenty of CEOs talk the language of Corporate Social Responsibility but how many embed it in their businesses? A Harvard Business School study found that the CSR function is typically housed at least two levels below the CEO – too often, it exists in a silo and a company’s CSR programme is neither integrated with its broader business strategy or aligned to its purpose and values. Run by internal managers, often without the involvement of the CEO, the danger is that they become a set of uncoordinated initiatives rather than a coherent plan of action.

When companies start hiring a vice-president responsible for CSR and reporting directly to the CEO that would indicate progress – but you could argue that the day they start firing them is a better sign because it means they are being held accountable and the issue is being taken seriously.

Social responsibility should be at the heart of every decision a company takes, not bolted on as an after-thought. Commerce and justice need to be intrinsically linked, not treated as separate entities.


Why Generation Y is falling in love with shared living

Residential real estate is an investment area which will offer interesting new opportunities in the years ahead. Shared living will become a major phenomenon, especially amongst young people who cannot afford to buy or rent a property in cities, but don’t want to be stuck in the suburbs. Community environments will offer an alternative way of living; you only pay for your room but share the costs of all other facilities.

WeLive is leading the way in the US, creating shared living spaces for young executives who are unwilling or unable to pay for an apartment. They emphasise community and flexibility, challenging traditional apartment living by creating shared physical spaces that foster meaningful relationships: communal kitchens; yoga studios; arcades. Their mantra is that we are only as good as the people with whom we surround ourselves.

I’m sure this is an idea that will take off in the UK before too long. Old Oak, launched in London in 2016, was once an office complex, but now bills itself as one of the world’s largest co-living spaces, with around 550 beds. Shared spaces and communal facilities lead to a more fulfilling lifestyle, say owners, The Collective.

Like all the best ideas, co-living is not new. Go back to nineteenth century America, for example, where boarding houses were quite common, offering a halfway house between family life and full independence. But it is an idea that has particular resonance with Generation Y, who have grown up with the concept of the sharing economy – if it works for cars and holidays, why not homes too?

In London, where house prices make it impossible for many under-35s to get on to the housing ladder, the attraction is obvious. Shared living offers good quality accommodation at an affordable price, with the bonus of being part of a ready-made community.


Emerging Markets

Emerging markets are becoming the world’s environmental pioneers

For those of us who invest in emerging markets, the speed of economic change can be intoxicating. It offers huge opportunities, but also presents significant challenges; we can’t ignore these social and cultural issues because only by overcoming them can we hope to sustain the growth we want to see.

There is no greater challenge than the impact of global warming. More than seven million people die prematurely every year from environmental pollution; more than one in four premature child deaths are linked to broad environmental causes. Global temperatures in 2016 were the hottest on record for the third year in a row, with global surface temperatures nearly 1C warmer than in the mid-twentieth century.

But global warming is not only the single biggest threat to human health, it also has the potential to become the single biggest driver of economic transformation in human history. The decarbonisation of our economies affects every aspect of our world, encompassing not just the way we generate power, but how we grow our food, travel and live our everyday lives.

It is often said that the sins of developed economies, whose factories belched out fossil fuels throughout the twentieth century, are being visited on emerging markets at the very point they are experiencing stellar economic growth for the first time. They are being required to decarbonise just as demand from a nascent, voracious middle-class is taking off.

But, as an entrepreneur and investor, I look at every problem as a potential opportunity. The Emerging Markets Symposium brings together great minds from around the world to debate the challenges faced by developing societies. The 2017 symposium, the eighth since it first met at Green Templeton College in Oxford in 2008, considered the issue of health and environment in emerging markets.

What struck me during the opening session was the sense of optimism despite the scale of the challenge. The symposium’s chairman, Shaukat Aziz, the former Prime Minister of Pakistan, hailed the Paris Accord as a historic, watershed moment, presaging a new era of global collaboration and an acknowledgement that environmental health is an issue that doesn’t have borders. Not only is the right to breathe clean air a basic human right, but it is also essential to increase productivity and thus prosperity.

Interestingly, the innovation curve is moving east to west and north to south, with the most dramatic shifts in approach coming from emerging markets themselves, according to Achim Steiner, former Executive Director of the United Nations Environment Programme, who gave the opening address. Thailand advertises itself as a ‘sufficiency economy’, Bhutan talks of ‘gross national happiness’ – but these are not merely theoretical concepts, they are national branding strategies which feed through to political implementation.

In China, a new narrative of ‘ecological happiness’ is embedded in public policy and has formally entered the language of its Five-Year Plan. It is recalibrating every aspect of the country’s infrastructure and will play a role in shaping the next stage of China’s economic development. It is also shaping the political debate; the environment minister recently issued a public apology to the Chinese people for unacceptable pollution levels, an event that would have been unimaginable not so long ago.

Mr Steiner believes emerging markets are now at the forefront of innovation – eight years ago, Kenya decided that it would generate at least 75% of its electricity from renewables – but only if treasuries do not define their investment choices too narrowly. The debate about renewables cannot focus solely on the cost per kilowatt hour, it must also include the cost to human health. This is the circular economy: the cost of reducing air pollution is outweighed by the benefits to human health.

As an investor, it is obvious that an explosion in green finance will be needed to fund the transformation of infrastructure. Hundreds of billions of pounds will have to be committed to overhauling transport systems and digitising energy networks. That too is an opportunity, provided we have the imagination to embrace it.

Once, we thought we could use our wealth and technology to make ourselves independent of nature. Now, we are more dependent on it than ever and we recognise that we need to protect nature in order to survive.

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