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Sustainable Finance

By Sharon Kimathi, ESG and Energy Editor

Hello Sustainable Finance readers!

Sharon Kimathi here. I’m the energy and environment, social and governance (ESG) editor, filling in for Ross Kerber while he is away.

As a Brit, I cannot compete with Ross’ quick wit and deep knowledge of former American presidents. Instead, I will bring you some top-quality sustainable finance news from around the world, with an ESG twist.

I’ll highlight a recent report from nonprofit research organization Just Capital which showed that companies still investing in ESG issues such as workers’ rights tend to perform better.

Sticking with the pay theme, I’ll also be looking at fashion house Burberry facing potential backlash from shareholders over its executive pay before pivoting to Snap’s activist investor feud.

If you like today’s newsletter, then please do click here to follow me on LinkedIn or click here to sign up to the Sustainable Switch newsletter.

Latest Headlines

Construction workers at the Madrid circuit ahead of the official unveiling. Madrid, Spain. REUTERS/Violeta Santos Moura

Fair wages = greater profitability

Just Capital’s released a report on how “non-financial” stakeholder metrics are detrimental to a company’s profitability and financial performance.

They found that key themes such as workers, customers, communities, environment, shareholders and governance showed a positive correlation with four financial metrics: economic profit margin, excess return, gross margin, and revenue growth.

I was keen to understand more about their research on the fair wages element and spoke to their CEO Martin Whittaker.

He said that companies investing in their workers through fair wages, better benefits, advancement and training opportunities, can lead to greater productivity, improvements in retention, lower absenteeism, better customer service, and ultimately greater profitability and competitiveness in the marketplace.

“For a long time, business leaders have believed that investing in their stakeholders will yield quantitative business outcomes. They just haven’t had the data they need to fully integrate this belief into their decision making,” said Whittaker.

“Not only does our research move the entire debate around stakeholder and financial performance forward, it offers a practical playbook to any business leader seeking to make real decisions about what to prioritize every day.”

Tell that to the European Central Bank who breathed a sigh of relief as fresh Eurozone wage growth stats show that the Iran-war-induced inflation surge has not set off a fresh round of pay demands.

The ECB fears workers will demand compensation for rapid inflation, much like in 2022, triggering a self-reinforcing cycle that can only ⁠be tamed through higher borrowing costs. Click here for more on the ECB story.

Company news

Burberry’s CEO pay ‘out of style’: Burberry faces shareholder opposition over executive pay at its annual general meeting next month. Under Burberry's proposal, CEO Joshua Schulman will get performance share awards worth up to 300% of his salary, ‌with ⁠his total potential package reaching £24 million ($16.41 million), but the proxy group Institutional Shareholder Services said execs stood to earn significantly more without giving up much of their guaranteed pay, warranting a vote against the policy.
Snap snaps over specs: Activist investor Irenic Capital Management said that the tech company Snap should be worth “a lot more than $7 billion” if the company follows its blueprint for change and considers ditching its new augmented-reality glasses called Specs. Irenic has argued Specs should be funded on its own, noting Snap has already spent more than $3.5 billion on the unit. Click here to read more about the drama.
NY City Pension Fund and BlackRock rocky relationship: Former New York City Comptroller Brad Lander in November recommended major city pension funds drop BlackRock and rebid its public equities index mandates. Now, BlackRock has a chance for a fresh start to keep managing the pension funds as the new City Comptroller ‌Mark Levine opened a rebidding process widely on Friday despite his predecessor's call for the city to drop the manager over its climate record. Click here for the full story.

Farmer Abdullah al-Qadi pours fermented coffee cherries onto a drying bed in Haraz, Yemen. REUTERS/Khaled Abdullah

On my radar

Costly coffee: Sticking with the top theme on pay, it seems that none of the world's top coffee roasters and traders have committed to paying farmers a living income even though ‌this is set to become a legal obligation for large companies operating in the European Union from 2029, according to a report by the biennial Coffee Barometer, prepared by a group of NGOs.
Comptroller of Currency report: Big U.S. lenders, including JPMorgan and Bank of America, are bracing for further public scrutiny over whether they improperly closed customer accounts on religious or political grounds. The Office of the Comptroller of the Currency is wrapping up a review that is expected to name and shame banks and result in disciplinary action, said several people with knowledge of the matter.
SEC blockchain stocks: U.S. equity markets may face a shakeup as the Securities and Exchange Commission readies a new policy that would allow crypto companies to offer blockchain-based stocks, analysts and lawyers said. Crypto industry insiders expect President Donald Trump's SEC chair, Paul Atkins, to unveil an "innovation exemption" soon.

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