Ahhh…. All is well. While that might depend on your perspective, be at peace knowing that the financial markets ARE trending in the direction of prosperity. If you derive prosperity by means of investing in companies poised for success, the economy is shifting to a place where companies compete for recognition of their contributions to the well-being of their employees and their customers while maintaining and consistently improving performances. Took long enough, right? The driving force is a metric known as environmental, social, governance (ESG); and from where we’re driving, the road to the golden age of economic oneness is paved with mindfulness.
It’s commonplace to hear business professionals explain an apparent lack of empathy in social and financial transactions with colloquialisms like, “keep emotions out of it,” and “it isn’t personal.” Mentalities of doing whatever it takes for the sake of profitable business are the precise thought processes that have us in the fix we’re in. This fix is relative, of course, but as a mindful economist I view limiting beliefs as the mental quick sand, sucking inflexible companies into case studies. The upside is Wall Street is already looking into this as the market begins to reflect the value of empathy and compassion.
ESG is the new game changing, moto moto (it means hot, hot). It boils down to the non-financial data about a company as it relates to sustainability. Companies who care about their reputations and the environment have been boosting green efforts that include recycling, renewable energy sources, and influencing early ESG metrics: metrics soon to include all of a company’s efforts in terms of social, environmental, and economic impact.
Quantifying that has to be both subjective and transparent. Anyone wanna help me with my algorithm?
PUBLIC DEMAND PUTS VALUE IN PLAY
Pension funds are big business in the investment world and the money that goes into them comes from working class people looking to secure their retirements. More recently, those workers have been requesting that their money be invested in companies that align with their moral values. Environmental and political issues accelerated this trend — leading green efforts to expansion through advocacy. Now, as gun violence proliferates, investors have asked that their funds to not be invested in companies that profit off of weapon manufacturing. This ESG dataset is poised to track all the good deeds companies do so investors will know who they really want to back.
If you need a broader picture painted, this metric creates a new contest to see which companies can do the most good for their employees, customers, neighbors, and environment creating quite the opportunity for socially conscious corporations, philanthropists and non-profits where better customer sentiment is recognized, and eventually contribute to a more aware economy.
Wall Street is all for the ESG metric, so long as it doesn’t affect the company’s bottom line.
The time it takes to adapt to new protocols isn’t a luxury public companies can afford, but I wouldn’t be surprised to see ESG boost a stock price despite a dip in profits. By sourcing research and ratings companies like Morningstar with Sustainalytics and MSCI’s ESG Research and ratings, companies like BlackRock, Inc. have already launched exchange-traded funds focused on ESG, stating this fund will not include companies involved in the business of tobacco, controversial weapons, or are in the midsts of controversy in general. While investors would prefer more transparency and consistency over how research firms calculate ESG, there are over 100 individual ESG research firms zeroing in on individual sustainability segments like climate risk or diversity and inclusion, leaving the market begging for a vendor to clean this all up.
While Wall Street trends toward embracing values, companies pursuing sustainability for a variety of reasons are turning to consulting companies like the NeuroLogic Institute for Khalil Smith’s Diversity and Inclusion advice, corporate mindfulness entrepreneurs like Laura Putnam (add link), and even social groups (I see you WISE-LA). What companies are coming to understand is that the best way to improve upon a business is to improve its people within. Happy veteran employees make better contributions and incorporating mindfulness practices enable employees to be more comfortable making contributions knowing their colleagues are ready to listen with an open mind.
What’s driving this trend?
The World Health Organization (WHO) stated that “depression” is the world’s greatest threat to humanity.
The United Nations (UN) in response drafted guidelines to help companies and countries sharpen their focus. The ascension of ESG is proof that companies are poised to gain from increased levels of employee and consumer positivity, prompting the question: and what’s better than a win, win?
And why are so many people choosing mindfulness as their corporate North Star?
Mindfulness, as a practice, conforms to the individual person, or company. Beyond an origin in ancient practices from around the world, its core tenets are a focus on building positivity from within and externalizing it to the world around you. The concept translates to countless benefits that include physical, emotional, mental and spiritual health (if you wish). From a business practicality perspective, each of these benefits has a place in extending us from traditional product and sales domains into brand extension and consumer expansion innovation. Every form of meditation and yoga influences our attention to our own energy in the moment. If that is a concept you can wrap your head around, so to speak, you can appreciate its potential to not only multiply the benefits of exercise and relaxation, but problem solving and work in general as well.
It’s exciting to see how quickly mindfulness is increasingly valued in the corporate setting. Disney and Activision are both establishing internal teams focused on Diversity and Inclusion. Its relevance to mindfulness you ask? One must first open the mind to accept a new way of thinking and problem solving before they can adopt the premise that D&I is more than ethnicity calculations, but applicable to how we respond to changing competitive climates. Disney and Activision’s efforts may stem from Aetna’s 2012 internal study with Duke revealing that their $120K annual investment into mindfulness has saved them $6.3 million over four years, reducing healthcare costs by 7 percent.
The success of Headspace’s guided meditation app serves as evidence of how mindfulness practices can effectively remove obstacles that impede the perspectives of others. I always recommend binaural beat apps. My own is U4Ea on IOS. It is designed to function secondary to other sounds, shifting you naturally to a desired state of mind while you go about your day. Or, possibly, as you go about the future of the corporate climate.
It’s In the end, whether it’s the leader of your firm or support staff that decides to apply mindfulness efforts to their work, they will bring greater levels of effectiveness to the roles they play. And when they outgrow that pot, they’ll be valuable assets where ever they take root next.
And for those concerned about the bottom line, take a look at Ugg. Their parent company, Deckers Outdoor Corporation (NYSE:DECK), dealt with a plummeting stock price when word got out in 2009 about how Ugg was possibly receiving their supply of leather from companies with inhumane practices. Their stock has since recovered and is currently approaching an all time high. Most research reports indicate that their expansion into digital markets are the primary cause, and fund performance estimates recommend holding this equity in your portfolio. Their recent release of an official statement further explaining their long standing position on animal cruelty and how their products are supplied is one example of a company who mindfully weathered the storm and will likely continue to do so. We’ll see how Facebook and Wells Fargo fair after their efforts.
Stay tuned for more on how to be a mindful employer, a mindful employee, and a mindful investor.
What’s in your portfolio?