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Patagonia’s Yvon Chouinard has wowed the world with the announcement last week that he will be setting up a non-profit to give away his family ownership of the company to the climate cause.
The outdoor retailer is worth $3 billion according to the New York Times. It brought in a revenue of around US$1 billion (A$1.5b) this year, and Chouinard’s net worth is believed to be US$1.2 billion (A$1.8b).
The new ownership structure will direct any earnings that aren’t put back into running the company toward combating climate change – about US$100 million (A$150 million) every year.
Not only that, but he chose to jump through tax loopholes that may have seen him benefit financially from this decision, as many other billionaires have.
The outdoor industry businessman, environmentalist and philanthropist is an avid kayaker, alpinist and surfer.
And he’s one of the first to have grabbed a metaphorical surfboard and caught the rising wave of corporate responsibility by putting his money where his mouth is.
We think that to say this is commendable is an understatement considering the moves that are being made across the business world (which often includes pointing fingers, greenwashing, or sitting on hands).
In the property sector some big names say they are really making large strides (literally) towards housing affordability… by going hiking.
Next month, property and construction leaders are taking what looks to us as a paid vacation in Queensland to “raise awareness” of the growing issue of housing affordability. Walk Against Homelessness will take place on 22-23 October and the walkers will end the journey at the Property Council of Australia’s Property Congress.
The 17 hikers include executives from Australian leading property companies. There’s some big names on the list, who may or may not have had very much experience sleeping in tents, and if so probably not on the side of the streets.
One company has started off in the lead having raised over $5000… by asking others to donate.
The good news is the money raised will help support a 19 bedroom youth housing project delivered by Property Industry Foundation (PIF) and operated by The Salvation Army, called Haven House South Dowling. PIF chief executive Kate Mills said she is thrilled about the big names participating.
“Homelessness is a complex and wicked problem with no single cause and no single solution. It requires a multi-agency, government, and private industry response.”
That’s very true, and both PIF and Salvation Army are doing some great work to counteract the problem.
But if these executives from major property corporations are really concerned about housing affordability, we are really excited to see what comes next: the concrete steps they will take to leverage their standing and scale up the action.
Let’s take a look secondly at the recent news that landed in our inbox with great accolades: that some big banks have taken the big steps to reach a “key milestone” in their carbon reduction commitments.
What’s the big deal,you may ask?
These two banks (Bendigo and Adelaide) partnered with SG Fleet to give three of their top executives Nissan Leaf E+s. Applaud, please! But it would be good to know a bit more about what else is in their climate change kitty to enthral the crowds and build their loyalty.
We are not saying that all corporations are just sitting on their hands completely, of course.
Actually, the good news for us is that it’s now becoming easier for individuals to find out which companies really are taking action, and which are greenwashing.
Now a finance and insurance rating scorecard ranks mutual funds and exchange-traded funds based on their investments in banks and insurers providing loans and underwriting that support fossil fuel projects. So you’ll be able to see who’s putting their money into funding the climate crisis.
The new ratings from corporate social responsibility non-profit As You Sow are designed to help investors identify investments that avoid climate risk from financial institutions.
Danielle Fugere, president and chief counsel of the foundation says the ratings will help investors become aware of how carbon intensive their investments are.
“By continuing to provide support to high-carbon companies and projects, financial institutions are exacerbating the climate crisis and delaying the transition to a clean energy economy,” he says.
“Climate change creates financial risk. Investors should be aware of which companies in their portfolios are contributing to those risks.”
Andrew Montes, manager of As You Sow’s Invest Your Values program said many big banks are really digging deep into their pockets towards funding climate change withouts regards to the costs.
“Since the Paris Agreement, the six largest US banks – JPMorgan Chase, Citi, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs – have provided $1.4 trillion in financing to the fossil fuel industry, contributing to the climate crisis and resulting in substantial portfolio risk for investors.”
The cost of doing nothing, of course, is monumental – we know this.
It’s easy to think about climate costs as a “future problem”. But the costs aren’t just incurred some day down the track.
The reputational cost, for example, has already been piling up.
New research into some of the biggest crises of a generation has revealed financial damage some companies have sustained due to their downhill reputations.
The research paper, Crisis Value Erosion by SenateSHJ analysed 30 notable business crises over the past 40 years, and found that 70 per cent of listed companies experienced a drop in share price as a result of a crisis.
The average drop in share price was 19 per cent and the median earnings per share drop was 143 per cent.
Australian executives say that once a crisis has been identified, it’s critical that companies prepare for the risk and alter their governance accordingly in order to survive.
“Not surprisingly, the financial cost of a crisis is overwhelmingly the biggest impact felt by business leaders,” Craig Badings, partner at SenateSHJ said. “Those who have the right crisis preparation and management systems, tools and support teams in place are in the best position to minimise the damage.”
And the wins of successfully navigating that crisis not only reduce reputational risk, they deliver significant returns.
A new study of over 140 investment managers revealed the benefits of responsible investing, also known as sustainable or ethical investing.
The report from Responsible Investment Association Australasia (RIAA) in partnership with EY has found that assets managed using a responsible investing framework have now hit $1.54 trillion.
It’s a new record for Australia and testament to the rising tide of corporate engagement on sustainability issues.
The report also found that about $726 billion in assets under management is now being used by fund managers towards environmental, social governance issues, up 54 per cent from 2020.
Back to our mate Yvon…
Patagonia’s Yvon Chouinard sets high standards for billionaires and corporations alike.
He rose from being an “existential dirtbag” selling his wares from the back of his car, (and eating cat food it’s been reported) to head a $3 billion global company.
What other leaders can say that they’ve risen from nothing, to one of the biggest brands in their sector, only to give it all away?
How many leaders are willing to get off their hands and heed the call from scientists, customers, and investors alike?
Because the benefits of action are plentiful and the cost of doing nothing is too great to ignore.
There’s a green wave rising and in 2023 that wave will only rise higher.
But only if we all grab a surfboard.
Surfs up!… see you there?
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