EEA YouTube Show: Impact Investing Is Not a Tradeoff

• Organizations with high levels of customer, employee, supply chain and distribution partner and community engagement with sustainable environmental practices will outperform by a factor of 2% to 4% a similarly weighted portfolio in terms of market sector, performance and other key business performance factors. The primary reason: They have higher sales and profitability because customers like their products and services; they have lower costs and higher quality because employees are engaged in their missions. Supply chain and distribution partners are more willing to help out because of their loyalty. There are lower risks because they are welcomed by the communities in which they operate and because they practice sustainable environmental practices. 

• At great companies, workers buy into the company’s mission and culture. They support it, they are wholly invested. Customers know the company culture, its values and whether it speaks to them or not. They're invested too. It's all about organizations investing money on where the relationships really count in terms of long-term productivity, quality, loyalty, innovation, etc. 

• States such as Texas or others that ban ESG considerations by public pension and other government funds are costing their tax payers not only a significant advantage in enhanced stock performance but also higher underwriting fees because of major banking underwriters pulling out of states with such laws.  “It seems silly to me and frankly anti-American,” says Potts, who is also an attorney. “If competitive data is available about companies, investors should be able to access that data when making investment decisions. The idea of banning anyone from using data from making investment decisions seems foolish.” 

• The stocks in companies that donate primarily to the right or left can both outperform the market if they score well in other human capital and business factors, notes Britton. In fact, both the company’s DEMZ ETF (exchange-traded fund) is performing similarly to a mock GOP ETF it hopes  to formalize soon into a marketable product, without both outperforming their benchmarks. However, of two funds that are equally weighted in terms of sectors, the  one dominated by donors to Democrats is outperforming the one dominated by Republicans. (Note: Reflection Analytics helps investors create portfolios based on any political leaning of its clients.)

• There are both Democratic and Republican companies that have reached the same conclusion about the benefits of stakeholder management practices, even if coming at the subject from different directions. 

• The ESG movement was in part set back by the poor standardization of current sustainability metrics, which in some cases go back decades. “How do people understand ESG standards when one might include Exxon Mobile or Tesla, and another specifically exclude both of them?”  (Britton’s company hopes the 75 transparent metrics used in its process will help mitigate this issue.) 

• Almost every CEO learns in school that their employees and customers are their No. 1 assets, and yet almost nowhere do they appear on financials based on GAAP (Generally Accepted Accounting Practices), unless a company is sold.  For the most part, people are carried as liabilities and expenses on the balance sheet. So, neither the CEO, banks nor investors see almost any human capital data that could yield an obvious alpha or present a risk in terms of performance. 

• No matter how well run a company by stakeholder management standards, no organization is immune from market, demographic, economic, climatic, regulatory, safety, or other risks that can affect performance, although such practices may make them more resilient and innovative. ESG factors are just another way to find nuggets in an investment portfolio.  If you have the right investment manager, you can outperform the market based on almost any political values you seek to emphasize. 

• Stakeholder management isn’t just about paying employees a living wage.  It’s managing an entire system of interrelated stakeholder issues toward a common purpose. Investing in communities isn’t corporate social responsibility, it’s helping to create an environment in which stakeholders thrive, thereby making them more productive, loyal, and healthy customers, employees, and other stakeholders. 

• Analyzing stakeholder management includes an analysis of the organization’s vision, how it treats its customers, employees, and other stakeholders and the environment; its ethos and ethics, their governance practices, and how they manage their supply chains and distribution partners. 

• US ETFs claiming to use ESG criteria in their investment portfolios have one more year to comply with the updated Securities & Exchange Commission Name Rules, which require them to clearly explain the basis upon which they select the stocks in the portfolio and to ensure that at least 80% of the stocks selected comply with such criteria.  Reflections Analytics is targeting its new ESG evaluation platform in part to help ESG-oriented ETFs comply with the new regulations.

ESM Is Published by The EEA: Your Source for Effective Stakeholder Management, Engagement, and Reporting

Through education, media, business development, advisory services, and outreach, the Enterprise Engagement Alliance supports professionals, educators, organizations, asset managers, investors, and engagement solution providers seeking a competitive advantage by profiting from a strategic and systematic approach to stakeholder engagement across the enterprise. Click here for details on all EEA and ESM media services.
 

 1. Professional Education on Stakeholder Management and Total Rewards

• Become part of the EEA as an individual, corporation, or solution provider to gain access to valuable learning, thought leadership, and marketing resources to master stakeholder management and reporting.
• The only education and certification program focusing on Stakeholder Engagement and Human Capital metrics and reporting, featuring nine members-only training videos that provide preparation for certification in Enterprise Engagement.
• EEA books: Paid EEA participants receive Enterprise Engagement for CEOs: The Little Blue Book for People-Centric Capitalists, a quick implementation guide for CEOs;  Enterprise Engagement: The Roadmap 5th Edition implementation guide; a comprehensive textbook for practitioners, academics, and students, plus four books on theory and implementation from leaders in Stakeholder Management, Finance, Human Capital Management, and Culture.

2. Media

• ESM at EnterpriseEngagement.org, EEXAdvisors.com marketplace, ESM e–newsletters, and library.
• RRN at RewardsRecognitionNetwork.com; BrandMediaCoalition.com marketplace, RRN e-newsletters, and library.
• EEA YouTube Channel with over three dozen how-to and insight videos and growing with nearly 100 expert guests.

3. Fully Integrated Business Development for Engagement and Total Rewards

 
Strategic Business Development for Stakeholder Management and Total Rewards solution providers, including Integrated blog, social media, and e-newsletter campaigns managed by content marketing experts.
 

4. Advisory Services for Organizations

 
Stakeholder Management Business Plans;  Human Capital Management, Metrics, and Corporate Sustainability Reporting for organizations, including ISO human capital certifications, and services for solution providers.
 

5. Outreach in the US and Around the World on Stakeholder Management and Total Rewards

The EEA promotes a strategic approach to people management and total rewards through its e-newsletters, web sites, and social media reaching 20,000 professionals a month and through other activities, such as:

• Association of National Advertisers Brand Engagement 360 Knowledge Center  to educate brands and agencies.