I’ve been to a number of advisor industry conferences over the last five years–some put on by custodians or broker/dealers and others by professional associations. None, however, was quite like SRI in the Rockies, which I had the pleasure of attending for the first time this year. Yes, there were the usual mutual fund and asset management companies
represented as sponsors and program participants and an exhibit hall for firms offering to provide solutions to the advisors in attendance, but there were also corporate sponsors such as Dell, Merck, and Campbell Soup Co. There was also a palpable sense of being among a diverse group of people who share a common vision and passion.
There was a lot to learn over the course of the three-day event, with sessions on subjects as diverse as how the consideration of environmental, social, and governance (ESG) factors fits in with an advisor’s fiduciary duty, measuring the social return on investment, and active versus passive investment strategies. Having the opportunity to listen to SRI practitioners talk about their experiences and meet advisors who implement such strategies for their clients gave me a lot to think and write about in the months to come. The experience certainly made me realize that the world of SRI is deeply nuanced.
To begin, I’d like to share with you some of the things I learned that might help advisors get a different perspective on how they judge companies as potential investments.
WalMart: Saving the Planet Is Good for Business
Among the eye-openers for me was a session led by Gil Friend and L. Hunter Lovins, both of whom consult on sustainability issues to major corporations through their respective firms, Natural Logic and Natural Capitalism Solutions, and teach at the Presidio School of Management, one of the first accredited programs offering an MBA in Sustainable Management. Although the speakers warned that there’s a limited time available to address issues of sustainability, climate change, and energy sufficiency, they also warned that when things get back to “normal” it won’t be the normal we used to know.
Both Friend and Lovins have consulted on sustainability for WalMart and offered some insight into how the world’s largest retailer is addressing these issues. They pointed out that four years ago WalMart pledged to use 100% renewable energy, to produce zero waste, be carbon neutral, and to sell only sustainable products, but with no idea how they would achieve those goals. Now they’ve told all their suppliers that if they want to sell products in WalMart stores (and what manufacturer doesn’t want to sell in WalMart?) they will have to subscribe to the same goal.
“Part of this is pure financial self-interest,” on WalMart’s part, Friend pointed out. If WalMart can take a cost for energy out of its operating budget by installing solar panels on store roofs and conduct similar efforts in renewable energy projects, it helps the company maintain its position as the low cost leader. As an example of the logistical thinking that goes at WalMart, he cited a project “where they took the size of a cardboard box holding a child’s doll down by about a half a centimeter; it’s $3 million to the bottom line.”
“WalMart is doing more, I would submit, to move the needle than any of us. And that ought to be sobering to you,” added Lovins. “Who would have expected that?”