“Can Wall Street Win in Sustainable Investments? The Social Function of Marketing for Good” – Elsie Maio
The opportunity is here and now. Let’s dive into the investment ecosystem to survey from the inside the dynamics of the sustainable, or impact investing trend.
I was moved to do so by the much ballyhooed transfer of investable wealth to values-seeking millennials (estimated at $30 Trillion) and to women (estimated at $22 Trillion). How prepared was Wall Street to meet this imminent and perhaps pent up demand for well-performing investment vehicles that enhance the sustained well-being of people and the planet?
In short: While Wall Street is standing in its own way on this one, it is poised to break through to create a whole new marketplace. But it will require concerted change. Right now, an amorphous collection of investment offerings, certain significant asset pools and a lot of disparate initiatives and shiny marketing communications are indeed growing, apparently willy nilly. And for it to emerge as a thriving marketplace requires leadership and some new skills.
Marketers, even those beyond the investment ecosystem, must understand this shift, particularly since it will change the way in which it segments and targets a cynical generation. There will be no short-cuts or spin-marketing. With that in mind, here are five highlights, including a call to action to those who would take a leading position in the emergent marketplace for those estimated $50+Trillion in investable assets:
CALL TO ACTION: STEP INTO THE VACUUM IN THREE WAYS
The market for so-called responsible investing, sustainable investing or impact investing is waiting for Wall Street to step forward with:
1. Authentic Leadership.
A business as usual approach will continue to retard the development of the sustainability-, responsible-, and impact- investing markets until leader(s):
• Step into the vacuum of confusion to galvanize momentum
– Sort out the effects of the Tower of Babel: Product categories, performance characteristics, verified data, contradictory information owing to a lack on shared definitions
– SASB is a step toward that, gaining consensus from the issuer side on definitions of risk and opportunity factors such as ESG and their expression in different industries, but that mandate is not enough
With confidence and courage. That’s both a public stance and an internal stance, often requiring greater coordination among internal business units at the large firms. So that, when marketing promises sustainable investment options, the pipeline of product sourcing and product development is ready to deliver.
And externally, organizations that put a stake in the ground and define their role in contributing to planetary sustainability and social wellbeing, like NORDEA, have momentum in the market and the ear of influencers
• Reach out and engage with the larger investing public
– build awareness of the new opportunities in their language
– extend a halo of trust for the entire financial services sector by setting a new standard of transparency with down to earth engagement with the public.
• Confusion is a drag on financial advisors’ effectiveness, as well as general investors’ understanding. And that impact is compounded in the already trust-deficient financial services sector.
• Nuanced discipline, vs. another flavor of ‘irrational exuberance.’ The issues are systems issues and warrant careful examination and discourse.
See the sector for what it is: an interdependent ecosystem. The ectoplasm – or marketplace – cannot nourish the parts because it is dilute and fractionated. Players will all benefit from collaborating to build the market for sustainable investments. That is build demand, supply, and access. Precedents abound in other industry sectors, including the Dairy and the IT industries. At different points in time, the companies in each of those industries formed consortia to promote clarity and generate demand for their product category, rather than their proprietary products. The ‘high tide raises all boats’ strategy can help at critical inflection points in the evolution of an industry.Those that do step up and add value by helping to clarify, convene and cooperate will enjoy the halo of leadership. In turn, that will redound to their corporate image and reputation.
WHY THOSE THREE ACTIONS?
• The sector is even more confident and marketing more assertively. Ben Bingham, founder and CEO of 3Sisters Sustainable Management reflects, “It seems as though most of the skeptics are no longer in the room. There is a new comfort level, perhaps a result of COP21’s global consensus, but more simply a matter of time as ideas like climate change move from the category of ‘insane’ to ‘debatable’ to ‘accepted’. At 3Sisters we are not changing our decision process in approaching the millennial goals, but we will be sure to be less shy about it.”
• The Tower of Babel is getting louder; lacks the shared framework for language and communication. Growing confidence is raising voices but without a common vocabulary or even nomenclature that sorts product categories, the voice of the sector is an intimidating cacophony. Lots of proprietary varieties of trees and shrubs but no clearly defined forest(s). It’s harder than ever to discern how the sector and its offerings aggregate – what they add up to – and therefore, how to approach them – as an financial advisors or investor. And as corporate issuers consider how they might respond to investor interest in the category, they choose on a one-off basis what to emphasize in their positioning, their business strategy and their reporting conventions. That inhibits understanding and therefore confidence and trust among the mainstream.
Sustainability Accounting Standards Board (SASB) is helping corporates to bring some order and continuity by co-creating industry conventions with issuers. But still they are left to create their own context for stakeholders, including investors and the investment professionals. The onus is on the observer to see the benefit and the access points to/of ‘sustainable investing’. In our experience, it’s worth the effort to help not hinder understanding among stakeholders.
Right now, only dogged diligence will reveal the overall pattern of what’s available and suitable for different investment objectives. For example, we know that “What is impact investing to one person is socially responsible investing to another and sustainable investing to another.” There’s the opportunity for the sector to update the strategic marketing and communication framework that will focus demand in this marketplace.
• Material nuances are easily obscured in the emergent marketplace, to the detriment of what sustainability investors seek. The sources include:
– the politicization of underlying issues such as climate change, women’s rights, and gender diversity
– inconsistent analytical lenses; inconsistent ways of interpreting data
– limited data
– emotional ‘memes’
Clearly, the momentum is here for investments that merge personal sustainability and planetary sustainability. The investment community has the power to meet that demand and cultivate it. Let the leaders, clear thinkers and speakers, and co-operators emerge.
Elsie Maio has guided leaders in the Fortune 100 for over 25 years to achieve specific business goals by managing their brands strategically. She is an alumna of McKinsey&Company as well as several premier corporate identity firms. Since 1997 she has helped CEOs prepare for what she then identified as “the coming tsunami of corporate accountability.” Her work also has helped clients to list successfully on the New York Stock Exchange, reposition multibillion dollar product brands, and preserve their social values while sharpening their competitive edge. Her firm – Humanity, Inc is the successor company to Maio & Co, which emerged in 1994, born from three consulting disciplines: business strategy, brand strategy and values-led operations.