Sustainability was everywhere this week. At a dinner hosted by the investors' club Pi Capital, Jochen Zeitz explained his view of the world.
Best known for reviving the sportswear brand Puma, the German has since gone back to nature, and not just by buying and overhauling a 50,000-acre ranch in Kenya.
He remains on the board of Kering, the luxury goods group that controls Puma as well as Gucci, but his focus is on spreading the word that long-term business success means putting the planet right up there alongside profit. Mr Zeitz did that at Puma with an environmental profit and loss account that puts a figure on what a company’s air pollution, land use and water and carbon consumption cost the planet. He also launched the “B Team” with Sir Richard Branson to corral like-minded business leaders.
So far, so good, but will shareholders wear it? He foresees a day when running shoes will detail the “environmental calories” consumed in making them on the side of the box, rather like sugar and salt content is listed on a packet of cereal today. For investors to think it is all worth the effort, such initiatives must make a difference for the consumer too. For that to happen, businesses that care about sustainability must sell it better. As Mr Zeitz says, it wasn’t consumers who invented consumerism.
No longer is Charles ‘enemy of the enlightenment’
At the Guildhall in the City, it was the turn of an environmentalist who makes Mr Zeitz look like a novice. The Prince of Wales used a speech at Unilever’s Sustainable Living Young Entrepreneurs Awards to recount his long battle to get climate change recognised by governments and corporates, the disappointment of the Gleneagles G8 summit a decade ago, and the hope that the UN’s Paris conference at the end of this year will lead to a binding agreement on climate change after 20 years of near misses.
Things are moving on in the corporate world too, according to the Prince, who could be forgiven for well-worn pessimism. No longer is he labelled “the enemy of the enlightenment” by doubting economists, and chief executives don’t necessarily equate “environmental action with damage to their balance sheets”, he said. Now that pension and sovereign wealth funds are signing up to the cause – “and it seems to be taking an inordinate amount of time to get to that point” – the sustainability crusade will have money as well as ideas.
One man’s risky country is another’s country in need
It was notable that several of Unilever’s shortlisted entrepreneurs were doing clever things with mobile technology, including the winner, Daniel Yu of Reliefwatch, who helps health centres in emerging markets track their medical supplies inventory by phone. One of the buzz phrases I brought back from the World Economic Forum in Davos was “financial abandonment”, which relates not to banks that give up on consumers with a poor credit history, but to the dash by lenders to leave risky countries as they are forced to clean up their act. Standard Chartered and HSBC have both sounded the retreat from numerous territories because being party to money laundering or other transgressions is simply too expensive.
The question is what fills the gap. On the consumer side, mobile operators will become de facto emerging-market banks. M-Pesa, Vodafone’s money transfer system, is cited as a model, and Reliefwatch and others are welcome innovations. But pinging dollars between accounts doesn’t fund new roads or help small businesses become larger.
It’s true there are risks for any investor in some emerging markets. One asset manager moans he sunk millions into a new African railway line only for it to be nationalised on completion. Yet such is the current clampdown that some economies are being all but excluded from international trade.
Should these countries have to fall back on shadow banks – mainly hedge funds, who are scared stiff at becoming regulated as tightly as the banks? It is a sector that has grown incredibly fast. The Financial Stability Board reported late last year that assets for non-bank lending institutions rose by 7 per cent in 2013 to $75trn (£50trn).
Mark Carney, who chairs the FSB when he is not governing the Bank of England, is intent on shining a light on the sector “in order to transform it into a transparent, resilient, sustainable source of market-based financing for real economies”. Good idea, but even that stance and the best technological advances won’t resolve a financing drought in the neediest parts of the world.
Standard Chartered’s chairman should walk first
Peter Sands donned a fetching scarlet jumper for the flight back from Davos a week ago. Rather than being on red alert that his job is under threat, the Standard Chartered boss is philosophical as bookies put him in pole position in the FTSE 100 sack race. It is true that the Asia-focused bank got caught out as the emerging markets it serves cooled down. True also that eight years is a long stint for any chief executive.
But I can’t help thinking that the Standard Chartered board and investors have got this all wrong. A new chairman should be instrumental in picking the new chief executive; it is more harmonious in the long run. Sir John Peace has shown great gumption in holding on to his chairmanships – witness his long goodbye from the credit-checking firm Experian – but he should leave before Mr Sands, no matter what his allies whisper.Reuse content