How to build your wealth and save the planet
Can you have your cake and eat it? Generally no but can you build your wealth by investing in great businesses which behave consciously. I know this may sound utopian but I believe it is possible and it is in fact already happening all around us with many new businesses emerging and adopting a more positive approach than their predecessors which were mainly obsessed with profitability and not much else. I, for one, really welcome such new companies. They are trailblazers for a new era of so called conscious capitalism.
The book Firms of Endearment: How World-Class Companies Profit from Passion and Purpose draws from an extensive research study looking for companies that focused on endearing themselves to their customers, employees, suppliers, communities, and shareholders. These FoEs are driven by “aligning the interests of all in such a way that no stakeholder group gains at the expense of other stakeholder groups; rather, they all prosper together.”
The authors and their research team narrowed their initial list of 60 companies to “28 companies we felt best manifested a high standard of humanistic performance” and did a financial analysis on these from an investor viewpoint. They found “these widely loved companies (those that are publicly traded) outperformed the S&P 500 businesses by huge margins, over ten-, five-, and three-year time horizons.”
The book dives deep into understanding what sets FoEs apart from their peers. It’s brimming with insightful stories and examples from many of the firms. Here’s a partial list of their “distinctive set of core values, policies, and operating attributes:
- Subscribe to a purpose for being that is different from and goes beyond making money.
- Actively align the interests of all stakeholder groups, not just balance them.
- Devote considerably more time than their competitors to employee training.
- Their employee turnover is far lower than the industry average.
- Consciously humanise the company experience for customers and employees, as well as create a nurturing work environment.
- Project a genuine passion for customers, and emotionally connect with them at a deep level.
- Consider their corporate culture to be their greatest asset and primary source of competitive advantage.”
The authors talk about a new Age of Transcendence which follows on from the Age of Empowerment and the Age of Knowledge. To quote directly from the book “The Age of Transcendence signifies a cultural watershed in which the physical (materialistic) influences that dominated culture in the twentieth century ebb while metaphysical (experiential) influences become stronger. This is being driven by the fact that an increasingly larger proportion of the population is becoming older and such people are more interested in giving rather than accumulating. So it is becoming a cultural shift.
Research shows that investors prefer investing in sustainable companies which are businesses that do good and do no harm.
My company Minerva Money Management manages the YFS Intelligent Wealth Fund. We are members of Principles of Responsible Investment. Our fund is currently applying for ESG status with Morningstar which we expect to be given soon. Furthermore, our investment strategy already encompasses the principles of the successful companies described in Firms of Endearment.
So if you would like to invest sustainably in FOEs look no further than the YFS Intelligent Wealth Fund. You know it makes sense.*
* The value of your investments can fall as well as rise and is not guaranteed.
This blog is based purely on my personal opinion and experience. You should always seek advice from a professional before investing your money.
The contents of this blog are for information purposes only and do not constitute individual advice. All information contained in this article is based on our current understanding of taxation, legislation and regulations in the current tax year. Any levels and bases of relief from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future.