News Briefs: Sustainability a Growing Buying Factor, Greedflation Risks, Engagement ROI Based on Job Mobility...

Here’s a periodic ESM roundup of news briefs on stakeholder management, engagement, ESG (Environmental, Social, Governance) and human capital management.

Sustainability Ranks Among Top Purchase Decisions
ANA Publishes White Paper on Brand Engagement 360
Greedflation Cited by Banker as a Danger to Capitalism
Link Between Employee Satisfaction and Stock Returns Highest in Countries With Job Mobility
Governor Ron DeSantis Leads Alliance of 18 States to Fight Against ESG
Did ESG and DEI Cause the SVB Bank Failure?

A survey finds that consumers increasingly make buying decisions based on sustainability issues...A Fortune article highlights potential impact of “Greedflation”...Association of National Advertisers runs a report on the economics of Stakeholder Capitalism...Study finds the link between employee satisfaction and stock returns is greater in countries with high labor mobility.

Sustainability Ranks Among Top Purchase Decisions

One in two consumers report they have changed food and grocery brands based on environmental, social or governance (ESG) considerations, according to the 2023 US Brand Sustainability Benchmark based on 33,000 respondents' views on more than 150 brands, collected from April to December 2022. The survey finds that this figure is even higher among millennials, “seven in 10 of whom have switched brands due to sustainability concerns.”

According to the report, “consumers are changing brands to better align with their values and choosing brands with the strongest perceived sustainability credentials at twice the rate of the average brand. Approximately half of consumers have changed food and grocery brands based on ESG considerations, while approximately 70% of millennials have done the same.”

The survey finds that 85% believe “it is important that businesses act responsibly when it comes to society and the environment. More than a third of consumers believe it is very important for businesses to do so, with this figure rising to nearly 40% of Gen Z and millennial consumers.”

Sustainability is a significant decision-driver, “as one in five consumers rank sustainability as a top-three decision criterion, with one in 10 millennials rating sustainability as their most important reason to select food and grocery brands, above even price and quality.”

ANA Publishes White Paper on Brand Engagement 360

As part of a program supported by the Enterprise Engagement Alliance, the Association of National Advertisers has published a white paper on the economics of a stakeholder approach to engagement. Read more.

Greedflation Cited by Banker as a Danger to Capitalism

This recent article in Fortune magazine entitled “Are We Looking at the End of Capitalism” suggests that corporations have demonstrated anything but Stakeholder Capitalism principles in their pricing decisions during the pandemic. The writer quotes Albert Edwards, a global strategist at the 159-year-old bank Société Générale, who “just released a blistering note on the phenomenon that has come to be called Greedflation. Corporations, particularly in developed economies like the US and UK, have used rising raw material costs amid the pandemic and the war in Ukraine as an ‘excuse’ to raise prices and expand profit margins to new heights.” He writes that “he’s never seen anything like the ‘unprecedented’ and ‘astonishing’ levels of corporate Greedflation than in this economic cycle.” The article suggests the need to consider a return to price controls.

Link Between Employee Satisfaction and Stock Returns Highest in Countries With Job Mobility

In this recent study, “Employee Satisfaction, Labor Market Flexibility, and Stock Returns Around the World Management Science,” the professors confirm the link between stock returns and high levels of employee satisfaction but find that the effect is higher in countries with higher levels of job mobility. The study was conducted by Alex Edmans, London Business School - Institute of Finance and Accounting; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR); Darcy Pu, London Business School; Chendi Zhang, and University of Exeter Business School, Lucius Li, KFUPM Business School.

In a study including 30 countries, the authors “find that the link between employee satisfaction and stock returns is significantly increasing in a country’s labor market flexibility. This result is consistent with employee satisfaction having greater recruitment, retention, and motivation benefits where firms face fewer hiring and firing constraints and employees have greater ability to respond to satisfaction. Labor market flexibility also increases the link between employee satisfaction and current valuation ratios, future profitability, and future earnings surprises, inconsistent with omitted risk factors and identifying channels through which employee satisfaction may affect stock returns. The findings have implications for the differential profitability of socially responsible investing strategies around the world – in particular, the importance of considering institutional factors when forming such strategies.”

Governor Ron DeSantis Leads Alliance of 18 States to Fight Against ESG

According to an announcement on the Florida governor’s web site, “Gov. Ron DeSantis and the governors of Alabama, Alaska, Arkansas, Georgia, Idaho, Iowa, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Oklahoma, South Dakota, Tennessee, Utah, West Virginia, and Wyoming formed an alliance to push back against President Biden’s environmental, social, corporate governance (ESG) agenda that is destabilizing the American economy and the global financial system. Earlier this month, Congress took action to pass legislation which would keep politics out of Americans’ retirement funds; however, President Biden has promised to veto this measure to further his progressive agenda. In a joint statement proposed by Florida, these states committed to lead state-level efforts to protect individuals from the ESG movement that threatens the vitality of the American economy and Americans’ economic freedom, such as removing all state pension funds and state-controlled investments from firms that follow the ESG model of ‘politics before fiduciary duty."

The statement does not include a definition of ESG or an explanation of how it harms the economy. The statement also doesn't answer the question how this law differs from Democrats are being accused of: trying to restrict free markets.

Did ESG and DEI Cause the SVB Bank Failure?

Writing in the Dispatch, writer Alec Dent suggests the failure of Silicon Valley Bank was due in part to “an alphabet soup of wokeness...DEI, and ESG.” Gov. Ron DeSantis tells Fox News’ Maria Bartiromo: “This bank, they’re so concerned with DEI and politics and all kinds of stuff. I think that really diverted from them focusing on their core mission.”

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