Proxy voting can be made better. This is important for all investors. Two foundations should be, better linking voting outcomes to long term value creation, and making proxy voting an integral part of the corporate engagement process.
Climate change is going to alter what can be grown where, and the yields that farmers can deliver. This is very likely to lead to higher prices. And yet current financial reporting by companies in the agricultural value chain doesn't really talk about this. This needs to change.
Current financial reporting effectively ignores the investments that create the majority of a company's financial value - their intangible assets. This includes many environmental, social and governance factors. We need better disclosure on this, but how?
Sustainable Investing is changing. Thoughts on the changes we have seen in 2024 and hopes for 2025.
Yes, investing is about the future. Future profits and future cashflows. But the value of a company is also impacted by historic innovation shortfalls. Nespresso shows it can work - will Nestle work out how to repeat the wins this brings?
Yes, demand for some 'dirty' products might collapse in the future. But, to make a compelling case to investors, we also need to understand if this negative outcome is already reflected in the current share price.
Diversity matters, but not the diversity you might think. It has become an accepted fact that there is a strong link between demographic diversity and financial returns. But it's not actually supported by rigorous analysis.
Audits matter. Much of the time investors don't get the data that underpins a company strategy. It's confidential. And so we rely on the auditor to check it. And this should include sustainability strategy. But, often it doesn't. That needs to change.
A clean, low carbon electricity grid is possible. And while the task of adding all of the renewables, batteries etc is challenging, the big barrier is political will and regulatory frameworks. Lets not pretend the route will be easy.
If we want companies to become more sustainable, we need to focus on the financial impacts of the transition. And we need to make the imperative for change clear - not just from society, but from governments and regulators.
Would taking a mining company private help with sustainability? Or could we achieve the same outcome with a material minority holding?
Accounting is the language of business - most investors would be lost without accounting numbers. And generally we need better sustainability related disclosures - a mining case study.