[A Quick Note: We’ve been asking for feedback and you’ve responded! All the content you have come to enjoy from Being Intentional is still available, but now some sections are being moved out of the newsletter and posted directly to our blog (Here). Our aim is to keep the newsletter to a more manageable length while also making it easier for everyone to get to the content that interests them the most as fast as possible. This is the first issue of the new layout we are trying, so please let us know what you think.]

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The Data and the Story

Greenwashing--it’s so hot right now.

As the issuers of reports, plans, and communications, the onus is on corporate sustainability teams to 1) not greenwash, and 2) ensure their communications could not reasonably be misinterpreted as greenwashing.

Looking back over the last 12-months across news media and Twitter, we can see that mentions of greenwashing have been following a steadily increasing trendline. Across this timeframe, there is an average of 2,460 posts per day--interest (or should we say concern?) in greenwashing is real.

But this is where things get really interesting. If we disaggregate the sources so we can see mentions in news media distinct from mentions on Twitter, it becomes apparent that the increasing trend is driven by social media.

Greenwashing is a topic of concern in the news media…just not as much of a concern as it is across social media. And this makes sense when you consider that news media are approaching the topic from a different operational context than are the vast majority of individuals posting on Twitter.

In a fundamental sense, greenwashing is when a company benefits from the illusion of change while actively not engaging in change, or even while preventing change. It's about benefiting from intentional deceit. This is largely the definition the established news media operate with. So to run an article accusing any company of greenwashing requires substantial research and analysis. They need to be able to adequately contrast anticipated outcomes to actual outcomes and establish intent in the event of any shortfall. It’s not easy and certainly not fast.

People on social media, on the other hand, are not constrained by this definition. From our observations, accusations of greenwashing fly not only when companies benefit from intentional deceit but also when a company pledges--or delivers--outcomes that do not meet the individual’s expectations. And it is this operationalization of the ‘greenwashing’ term which is growing in prominence.

You commit to Net-Zero by 2050 but I want full decarbonization by 2030--Greenwashing! You are actively implementing DEI policies but I want quotas--Greenwashing! Your view of sustainability is heavy on the social but mine is heavy on the environment--Greenwashing!

As the world becomes more concerned with sustainability so too does it become more concerned with false commitments to sustainability. The challenge of course is in everyone’s ability to differentiate the meaningful from the false commitments. 

As an individual, before you accuse a company of greenwashing, ask yourself: “Has this company failed to deliver on its commitments to sustainability or has it failed to live up to what I thought its commitments should be?”

As a leader of a corporate sustainability team, ask yourself:

• Are our sustainability plans integrated with our business activities?

• Do our sustainability plans commit to actual and meaningful change?

• Is this change equal to or greater than the illusion of change conveyed by the plans?

• Are the anticipated benefits of the sustainability plans likely to accrue due to the implementation of the plans rather than simply the communication of the plans?

In the Real World

The last two weeks have really brought attention to greenwashing.

The NewClimate Institute released the Corporate Climate Monitor 2022 (LINK) assessing the climate strategies of 25 major global companies (which, not incidentally, account for 5% of global annual GHG emissions). The report does an excellent job in suggesting an optimal trajectory to achieve the stated Net-Zero objectives and then finds that the 25 corporate climate plans are significantly lacking. 

What has the social media response been to the report so far? Excellent!...as the report is being embraced as ‘unveiling the shocking cases of greenwashing by the world’s largest companies’. Unfortunately, the report is not originally about greenwashing, but let’s not let that get in the way of going viral. The NewClimate Institute report is a great example of how corporate sustainability plans are engaged by a broader community of stakeholders and serves as a flagship example highlighting the five principal tensions in sustainability communication (which we present in our latest blog (LINK).

A new study published on Wednesday in the journal PLOS One, and carried here and here finds that the Oil Majors, including ExxonMobil, BP, Chevron, and Shell have been increasingly using decarbonization terms in their annual reports even though their purported actions amount to mostly pledges and not actual actions. There is lots of talk of transitioning to clean energy business models…but no actual transitioning.

What’s most interesting about this study is that it looks at data from 2009 to 2020, making it one of the more in-depth analyses to date. BP is likely the most active of the group, with mentions of climate change in annual reports climbing from 22 in 2009 to 326 in 2020, yet all the while generating only 2,000 MW of renewable energy (or the equivalent of two gas-fired power plants). Accusations of greenwashing may be thrown around quite freely…and sometimes they fit.

Greenwashing doesn’t just apply to companies. News broke earlier this week (LINK) that Morningstar, the leading data provider for mutual fund and ETF research, and now the owner of what used to be the Sustainalytics ESG data provider, removed a full 1,200 funds from its European ‘sustainable universe’ of assets. Following the EU’s rules on sustainability disclosures, Morningstar analysts reviewed all funds carrying a ‘sustainable’ designation and found 1,200 funds to be employing ambiguous language and questionable credentials. And just like that, $1.4 trillion in assets once considered Green moved to brown. There is a cost to greenwashing (one we discussed in our last Newsletter looking into the EU Taxonomy, which is clearly already having an impact!)

We’re trying something new for this newsletter–an audio version. The goal of this newsletter is to provide timely and actionable insights into the ESG and sustainability world. We’re delighted when people tell us they enjoy the newsletter but we know it’s not always light reading, and sometimes schedules are full and reading a long(ish) newsletter doesn’t always work. This is what led us to the idea of an audio newsletter. Technically this is a podcast but we’re going to stick to an audio book-style narration (for now 😉).

If you prefer to read the newsletter then keep going, you’re in the right place! If you’d like to listen to the audio version of this newsletter just click on the link below. This is our first attempt at this experiment and we’d love your feedback. Love it? Hate it? Please let us know. 

We also wanted to mention our newly launched website. If you’ve been a reader of Being Intentional you already know what we do but our site might help to fill in some gaps. Again, your feedback is very much appreciated. Check out our new site at www.esgmotive.com. 

As always, we are grateful for your support. This newsletter is something we love doing and we hope you enjoy reading it—and please consider sharing it! Thank you. 

What We Are Seeing

There’s something very interesting happening in the world of climate action. It’s still early, but a shift is perceptible. The last two years in climate action have been marked by a push to mitigate the worst outcomes of a rapidly changing climate. But now, it seems like the narrative may be shifting from mitigation toward adaptation, and this could be big.

Mitigation vs. Adaptation 

The mitigation effort is framed as marshaling all resources to keep global climate warming to below 1.5C above pre-industrial levels, as modeled by the IPCC. The context here is that even if we stopped all GHG emissions, warming would continue for decades due to the nature of the legacy emissions already present in the atmosphere, and so all efforts must be directed toward limiting the consequences of this ‘baked-in’ warming and preventing any further warming. Climate models predict that if we can keep warming to below 1.5C, we can avoid some of the most consequential impacts of a changing climate, but urgency is required as we have already surpassed the 1C milestone in 2017 and are forecasted to reach 1.5C potentially as early as 2030.

It has been this focus on mitigation which has fueled the rise of Net-Zero movement and ever-increasing pressure on companies to report their emissions profiles and adopt aggressive plans to reduce these.

It has been this focus on mitigation which has fueled the rise of Net-Zero movement and ever-increasing pressure on companies to report their emissions profiles and adopt aggressive plans to reduce these. So much of the environmental movement in general, and of the Business & Society relationship more broadly, has been subsumed by a focus on mitigation in efforts to keep warming below 1.5C.

But lately, we have been noticing more and more of the voices which were strong proponents of climate mitigation openly questioning if--and some even now stating that--keeping warming to 1.5C is simply no longer feasible.

The journal Nature surveyed over 200 climate scientists who authored the IPCC report seeking their perspectives on our collective response to climate change so far, with results published in November 2021 (LINK). Of the 92 responding climate scientists, fewer than five believe we are on track to keep warming below 1.5C by 2100, with the vast majority believing we will instead see warming in excess of 3C.

That climate scientists were increasingly skeptical of our mitigation efforts is not necessarily surprising, and most ‘science communicators’ and environmental organizations continued to push to not lose hope and to double down on our goals--defeat was simply not an option. But here we are in February 2022, and it seems the narrative is perhaps starting to shift.

The climate is changing, much of it is now inevitable, and so the focus should be on adapting to a changing climate and all that this brings.

The alternative narrative which has long been suppressed is that of climate adaptation. The context here is that the climate is changing, much of it is now inevitable, and so the focus should be on adapting to a changing climate and all that this brings. This narrative has been pushed back against by many storied environmental organizations because it is believed to undermine mitigation efforts. It is clear that the two--mitigation and adaptation--go hand-in-hand, but in a landscape of limited social attention and governmental resources, mentions of adaptation are actively suppressed in the interest of mitigation. If we open the door to adaptation, we lose the urgency for mitigation and the goalposts must be moved, or so the thinking goes.

But early signs of change are surfacing. The climate mitigation narrative is still dominant, but not quite as clearly as it used to be. To demonstrate, look at a recent high-profile Twitter exchange from this past weekend:

With nearly 40 thousand likes so far, Adam McKay’s original tweet is already one of the most-liked climate tweets in history. More interestingly, it is also receiving far more push-back from other reputable climate scientists and communicators--all push-back which would almost have never surfaced even 12 months ago. These tweets don’t use the words ‘mitigation’ or ‘adaptation’ in whole, but the themes are irrefutably present.

This change is evident in more than just weekend Twitter exchanges. Turning to our Dynamic Materiality engine, we can see that climate change mitigation is mentioned an average of 642 times per day across the global news media landscape over the last 30-days. In contrast, climate change adaptation is mentioned an average of 516 times per day across this same landscape and timeline. (For reference, climate change--without mention of adaptation or mitigation--is mentioned an average of 14.2 thousand times per day. Clearly, we still prefer to discuss the causes and consequences of climate change more than we do our responses to climate change!)

Where the early indication of change comes through is in the fact that daily mentions of climate change adaptation are growing 10% faster over the last 30-day period than are mentions of climate change mitigation. This relative growth pattern is not present if we go back to 30-day periods 6- or 12- months ago. This is new.

This is very interesting, and we will be keeping an eye on it. If the popular narrative of climate change tilts in favor of adaptation over mitigation, it completely re-writes the Business & Society relationship dynamics in this area. 

Mitigation, at its base, is an acrimonious relationship: it’s about blame and responsibility, disclosure and regulations, and of never truly doing enough--it's about working to prevent the worst. Adaptation, on the other hand, is an aspirational relationship: it’s about research and innovation, collaboration and possibilities, opportunity and improvement--it's about working together to bring about better.

We can’t give up on 1.5C…but we also can’t lose hope that we can bring about better.

Business of Sustainability

Take a moment to think of a few of your favorite companies, maybe ones you’ve worked with, invested in, or purchased from, and try to break them down into identifiable economic activities. If I think of Nike, I think of sportswear and equipment and filter it down into the economic activities of apparel manufacturing and consumer non-durable goods, as an example. Companies are great at coming up with poetic or empowering descriptions of who they are or what they do, but in the end, everything can be filtered down to basic economic activities, and these can be identified and labeled.

Labels matter…and they are about to matter even more.

That’s because the EU Taxonomy has finally been released!

Not sure why a ‘taxonomy’ is being celebrated, or even what it is? Don’t worry, you are definitely not alone. 

The EU Taxonomy is a technocratic development which likely means absolutely nothing to the majority of the world, but means so much to those of us working deep in the sustainability world…and now that it has been released, things in the sustainability world are about to change.

For so long, sustainability could mean whatever we wanted it to mean. Although empowering for some, this vagueness proved paralyzing for most. What exactly should companies and investors focus on? How should efforts be measured and communicated? What should we benchmark against? When do we know if we have done enough…or far too little? We always say that sustainability is business strategy, but that doesn’t mean it is easy to figure out what that strategy should be.

The EU Taxonomy is a ‘green’ classification system translating the EU’s climate and environmental objectives into criteria for specific economic activities and investment purposes.

Enter the EU Taxonomy. The EU Taxonomy is a ‘green’ classification system translating the EU’s climate and environmental objectives into criteria for specific economic activities and investment purposes. It builds upon the EU Corporate Sustainability Reporting Directive (CSRD) which provides a reporting framework/mandate for corporate sustainability performance and also ties into the EU Sustainable Finance Disclosure Regulation (SFDR) which provides a reporting framework/mandate for financial products and asset & investment managers.

This coordinated series of mandates and frameworks has been years in the making and is fueled by a recognition that companies and capital markets hold significant potential and responsibility to address climate and sustainability challenges while at the same time also recognizing that the field is derailed by ever more greenwashing and subterfuge. The CSRD tells companies, and the SFDR tells investment managers, how to report on sustainability. A corporate sustainability report should provide meaningful information on actual sustainability, not simply marketing claims, just as a ‘green’ ETF should hold positions in sustainable companies and not simply be a re-branding of existing non-sustainable ETFs.

A corporate sustainability report should provide meaningful information on actual sustainability, not simply marketing claims.

The EU Taxonomy is the key to making all of this work. It labels which economic activities are sustainable and which are not. A company reporting on sustainability can no longer spin whatever it is they want--the taxonomy is the definitive account of what is and is not sustainable. Investment managers can no longer market whatever they want as being ‘green’--the taxonomy is the definitive account of what is and is not sustainable.

In this first iteration, the taxonomy is starting quite broadly. Economic activities are identified as they pertain to these sectors, with intentions of expanding the taxonomy in both scope and detail in future iterations:

• Agriculture, Forestry and Fishing

• Manufacturing

• Electricity, Gas, Steam and Air Conditioning Supply

• Water, Sewerage, Waste and Related Remediation

• Transportation and Storage

• Information and Communication Technologies

• Buildings

All of this applies to the EU market but certainly has global implications. Much of the ESG and sustainability market is voluntary and non-standardized, so much so that having a strong keystone regulation from the EU leads many non-EU companies with exposure to the EU market, or ambitions thereof, to align with these standards. The EU gains first-mover advantage in this regulatory space. In a void of uncertainty, global companies and global investors will increasingly be benchmarking activities against the EU standard…and in turn, regional companies and regional investors will be benchmarked against their global peers. So all companies--not only those in the EU--should take heed of what is, and certainly what is not, considered sustainable within the EU Taxonomy.

 In a void of uncertainty, global companies and global investors will increasingly be benchmarking activities against the EU standard.

As an example, and to the dismay of environmentalists worldwide, nuclear and natural gas activities were included in the final EU Taxonomy. The draft taxonomy had initially omitted these activities and sent industry lobbyists into hyper-drive. Why? Because omission from the taxonomy could result in significant increases to cost of capital. 

The last two years have seen record inflows of investment funds into ESG assets, and most of these assets have been into ETFs and managed funds. Typically, these funds benchmark off of a ‘green’ index to determine which holdings to include. Under the EU Taxonomy (and the concomitant SFDR) these underlying indices will not be considered, nor permitted to market themselves as being, ‘green’ if they include economic activities in contravention of the EU Taxonomy. And just like that, trillions of dollars of ESG investment flows are gradually being redirected.

And more is coming. With the Taxonomy, the SFDR, and the CSRD in place, the EU is moving on to draft frameworks for ESG rating agencies. 

ESG and Sustainability have grown quite organically and are now a bit of a wild-west frontier--the onus is on the individual investor, consumer, employee to figure out what is what. This has provided a great deal of flexibility and independence to all companies to shape their sustainability programs as they wish--some have taken this opportunity to gain a structural competitive advantage by acting on sustainability as business strategy, some have opted instead to seek short-term gains through deceit and misinformation, while others still have simply ignored it all convinced that sustainability was just another passing trend.

The tide is turning and labels are going to matter more than ever. Take a look at the EU Taxonomy (LINK). As a company, how does your current sustainability programming and reporting correspond to EU guidance? Are you active in any economic activities which are not considered sustainable? If so, are these activities important revenue streams for you or rather legacy programs that were simply never truly shut down? 

Any company can issue a sustainability report, but with emerging regulations, not every company is going to be able to be labeled Sustainable--and this matters in the world of sustainable consumerism and ESG finance!

CSR Spotlight

YKK CSR Report Link

We had a lot of fun reviewing this CSR report--not only because it was so well done but because it was from a company that we almost never think of even though it’s products are all around us…even on us.

It’s not home decor, foodstuff, or consumer electronics. It’s much more fundamental--basic, even--than that.

It’s zippers…or fasteners to use the industry term.

YKK--maker of over half of the world’s zippers--released their 2021 Sustainability Report, and it is a great case study in integrated reporting.

Honestly, if you are a company looking for guidance to get into integrated reporting, a financial analyst looking for excellent comparative data, or a VC looking to help their portfolio companies prepare for markets which prize disclosures, you really do need to take a look at the YKK Integrated Report.

[Side Note: Did you know the YKK Group controls over 106 companies with over 44 thousand employees globally? We didn’t!]

What We Liked

• First off, this is not actually a sustainability report, it’s an Integrated Report…and this is excellent. We typically see companies release their annual report with a focus on strategy and financials and later release a distinct sustainability report with a focus on environmental and social developments. This is common, but unfortunate as it frames sustainability as being something outside of the business, and as we always say: Sustainability is business strategy. The YKK Integrated Report is a great case study in this respect. All elements of management strategy and outcomes, financial performances, environmental innovations and impacts, social considerations, and strategic planning are fully integrated one with the others. 

• YKK is driven by a guiding philosophy and this is obvious throughout all sections of the Integrated Report. YKK’s philosophy is the Cycle of Goodness where “No one prospers without rendering benefit to others”.  It’s not a philosophy to guide sustainability efforts or stakeholder engagement, rather it’s a philosophy shaping all of YKK and everything it does. Reading through the report, it is clear that the philosophy was not chosen to reflect the company’s ambitions but rather the company’s ambitions have long been shaped to reflect this philosophy. So many corporate mission statements or values seem like empty words strung together by a marketing consultant…but not in this case!

• All performance metrics are provided with full context and measured against a transparent benchmark. It’s not just that YKK has committed to reducing emissions, but rather we know they have reduced 20% of Scope 1 &2 and 36% of Scope 3 emissions against a 2018 baseline. This is a level of detail that allows for much more meaningful performance analytics.

• As impressive as the Integrated Report is, YKK goes even further and provides a distinct Data Book containing all ESG and Financial metrics. Full transparency and convenience--what’s not to like!

What We Would Like to See

• More of this. We had no idea YKK was so advanced in integrated reporting…but now that we know, we are that much happier with the fact that most of our clothing has YKK zippers (we checked!).

What We Are Saying

Blog Link

Someone Will Take Offense

There’s something that corporate sustainability and ESG teams are never truly prepared for. It’s not the reams of unstructured data, the vague definitions, the shifting goalposts, or even the mis-aligned incentives within their own organization. It’s the simple fact that the better you do, the more likely it is that you will offend someone. Sustainability is effectively a shifting of power balances, and when power balances shift, someone always feels they have lost something.

Welcome, everyone. Thanks for taking the time out of your day to read Being Intentional, Motive’s newsletter focused on understanding the world of Sustainability and ESG. 

This week, Larry Fink, CEO of BlackRock, published his annual letter to BlackRock clients, portfolio companies, and the public at large. In the world of sustainability and ESG, Fink’s letters have become must-reads because of the firm’s perspective on sustainability as an investment thesis…and because the firm commands nearly 10 trillion USD in assets under management.

It can be argued these letters have greatly shaped the general public’s perception of ESG, and certainly that of all companies. Whether you agree or disagree with Larry Fink, it’s difficult to ignore the importance of any firm controlling that much capital.

Of everything to consider in Larry Fink’s 2022 letter (and we will consider quite a bit of it in this newsletter), a line that really hits home with us at Motive is this: “We focus on sustainability not because we’re environmentalists, but because we are capitalists and fiduciaries to our clients.” We’ve said it before (many times) and will keep saying it (many, many more times): Sustainability is business strategy.

In terms of actionable details, this year’s letter is important in that it sheds light on BlackRock’s move to: 

1. Enhance client proxy voting across BlackRock’s portfolio companies. Investor relations meet stakeholder engagement--all companies should be preparing for greater scrutiny and more active engagement on all fronts.

2. Enhance calls for portfolio companies to synchronize their reporting with the Task Force on Climate-related Financial Disclosures (TCFD). Climate risk is a bottom-line issue and BlackRock is demanding the information it needs to better treat it as such.

Perhaps less actionable in the near-term but yet foundational to the long-term, Larry Fink’s letters also push the discussion on two critical and hotly contested, fronts: Materiality and Stakeholder Capitalism. We explore each of these below.

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What We Are Seeing

Larry Fink’s annual letters have a way of focusing investors’ and corporate executives’ minds, at least for a short spell of time. This is very helpful as one of the biggest challenges in sustainability and ESG is determining which issues are material to performance--or to put it another way, which issues investors and managers should be focusing their efforts and attention on.

Larry Fink does provide a great perspective into materiality, but for obvious reasons, his annual letters cannot be relied upon as an objective analysis of all things material. As head of the largest investment firm in the world, he brings a particular worldview to bear, one which may not be fully inclusive of all issues of interest to all stakeholders.

But all stakeholders, ourselves included, have a tendency to believe that the issues we each care about are the most important of all, and should be equally important to all other stakeholders as well. This is precisely why the task of determining and defining materiality is so challenging. Sustainability and ESG professionals are expected to act on the most material issues…but what is “most” material when all issues are defended as being material?

Recently, we thought back to what we believed were the most important issues in 2021. Surprising ourselves, we couldn’t agree on a list of top issues. For the more eco-centric among us, issues like water, deforestation, and climate action were sure to be at the top. For the more community-centric, issues like diversity and inclusion and gender equality were more highly promoted. But it turns out none of us were right. We all fell to the confirmation bias of looking at the world through the lens of what we cared about.

To see which issues are of greater interest, we curated a list of 118 topics which were arranged into 20 themes generally consistent with the 17 Sustainable Development Goals (along with three themes that just didn’t quite fit with the existing SDG framework). We searched over 70,000 news media outlets for mentions of these topics throughout 2021 and reported the relative salience of each theme--here, salience refers to how popular the topics within one theme are compared to all other themes. Here’s how each theme faired in 2021, across over 183M news articles in total:

Once we remove our ideological blinders, this distribution starts to make sense. Of course, Health & Well-Being is a main theme--we are currently living through a pandemic! This shouldn’t be surprising, yet none of us listed Health as a key theme prior to viewing the data simply because we were all still working from our personal lens which we each cultivated for years before COVID was ever known.

This distribution is a reminder that determining which topics are material and which are not is not straightforward. We will all defend the importance of the issues we hold dear while at the same time ignoring our confirmation bias. My daily news feed is crammed with climate issues, but my daily news feed--and likely neither yours--is representative of the global distribution of concerns. Even Larry Fink’s recent letter focused on the themes of Employment Relations, Innovation, and Climate which are all certainly important issues, but yet not among the top-three in the analysis above.

Materiality is a difficult concept to act on--sustainability and ESG professionals will perpetually battle with confounding influences (and Larry Fink and BlackRock are very large influences herein!), but an occasional review of empirical evidence can help us all counter our own biases…as well as those of others.

There will always be an element of subjectivity in determining what is material, and this is something sustainability and ESG professionals need to come to terms with, but this doesn't mean that determining what is and is not material needs to feel like throwing darts at a wall.

Business of Sustainability

[Blackrock Letter]

Larry Fink, (did we mention he is the head of the world’s largest investment management firm?) has released his Annual Letter to CEOs, and in it, he provides a sharp reply to any critics who thought he may have overstepped in his last year’s letter.

Larry Fink began his tradition of an Annual Letter to CEOs in 2012. These engagements were (and remain) opportunities for all CEOs to gain insight into the concerns and interests of the head of the world’s now-largest investment management firm. For CEOs with an eye to capital markets, they were not to be missed (...and now can’t be missed as they are promoted as paid advertising).

Earlier letters largely focused on issues of corporate governance, infrastructure, and general risks related to a changing societal interest in environmental impact. These earlier letters never received the public media attention that the more recent ones do, but CEOs nonetheless took note.

Research [Link] shows that companies of which BlackRock was a significant shareholder were quick to update corporate disclosures relating to the concerns brought to light in Larry Fink’s letters, much quicker in fact than companies for which BlackRock only had a minor shareholding or none at all. Which makes sense really, in the name of harmonious investor relations, why not quickly address issues which have been highlighted as potentially contentious by one of your largest shareholders?

It was in 2021 that the annual letters really made a splash. This was the letter in which Larry Fink highlighted a need for a ‘tectonic shift toward net-zero’. Previous letters had mentioned climate and environmental risks and sustainability in general, but this was the first to so boldly signal that a transition was afoot and that BlackRock would be positioning itself aggressively therein.

Environmentalists the world over were jubilant yet much of the established financial industry was shocked. Did Larry Fink step too far? Was he acting beyond any reasonable limits of fiduciary duty? Is this the end of capitalism? It’s not that he was the first to openly signal for the transition to a net-zero economy, but he was the first titan of capitalism to do so. Al Gore has been promoting this transition for over a decade, but he moves celebrity cache whereas Larry Fink moves nearly $10 trillion USD.

And now enter the 2022 Annual Letter to CEOs. This year’s entry re-affirms that a market transition is happening and that BlackRock is still jockeying to position itself at the head of what’s to come, but, and there should be absolutely no doubt in this, the transition is in fact powered by capitalism. In fact, it’s in the letter’s title: “The Power of Capitalism”.

This year’s letter settles any doubts markets may have had. BlackRock is steadfast in its perspective of economic transitions and heightened materiality of all things sustainability. The letter also makes clear that BlackRock is not becoming an activist of some sort but rather a more active owner--it’s not about doing the right thing, it's about doing the right things that ensure continued profits (or ‘durable profits’ as Larry Fink calls them with great care to not use the term ‘sustainable profits’ for fear sparking any further misunderstandings).

The letter from 2021 may have made the biggest splash, but it is this year’s letter that will make the biggest impact. It is this year’s letter in which Larry Fink explains how the unexpected statements made in 2021 were not made out of concern for the environment but rather out of concern for profit. It is this year’s letter that the logic becomes clear: net-zero and sustainability is not a transition of capitalism but rather a transition by capitalism…and BlackRock, or any of its portfolio companies, should not be willing to miss out on any of the profits therein.

Critics of Larry Fink’s 2021 letter were quick to fall back on Friedman’s exaltation that ‘the business of business is business’, and in 2022 Larry Fink is replying that the ‘business of business is business…and business depends on stakeholders’.

Stakeholder capitalism is here; sustainability is business strategy.

CSR Spotlight

Read BlackRock’s Sustainability Reports Here

Given the theme of this newsletter edition, and BlackRock’s own recent extolling of corporate executives to do more and be better, we thought it fitting to take a look at BlackRock’s own sustainability and ESG reporting.

What We Liked:

• The Dual Nature of Responsibility: As the world’s largest investment management firm, BlackRock is a company unto itself as well as an active shareholder in seemingly every other company out there, and it is clear that it understands its dual nature of responsibility. It is acting on sustainability within its own organization while also acting on sustainability in other organizations through its investment stewardship.

• Clear Focus: Sustainability and ESG improvement campaigns, policies, and programs--for itself and toward companies of which it remains a shareholder--are targeted and focused. Actions are motivated by clear objectives, which is great, however, it is not always clear how these objectives are determined, which is not so great.

• Reporting and Transparency: The Sustainability portion of the BlackRock website provides a lot of material and insight, including archived reports and disclosures. Access to information is always appreciated. 

What We Would Like to See:

• Better Information Hierarchy: This one was tricky for us. Often reading through one document we would think that something was missing, only to find it later in the third or fourth report we moved onto--or information we expected in one area was instead in a ‘Letter to CEOs’ somewhere else. We spent a lot of time going through everything we could and we are sure there is still material we missed. Revising the information hierarchy of the reporting, and the UX of the website could go a long way in improving accessibility.

• Deeper Insight Into Investment Stewardship: BlackRock is the world’s largest investment management firm and it does a good job in presenting its perspective and policies on investment stewardship. However, we would like to see more transparency around the outcomes of this stewardship. It’s great to provide countless different sustainability- or ESG-themed ETFs, but what is the median board diversity, water management, or emissions profiles of companies included across all of these ETFs? How do these metrics compare to a general benchmark, perhaps the S&P 500? There is simply too much greenwashing in the ESG ETF landscape right now to not be providing this type of information. Maybe this information was available, but after many hours of analysis, we still had not come across it (see our previous point about information hierarchy).

What We Are Saying

Blog Post: Welcome to ESG Reporting

The explosion of interest in ESG and Sustainability is pushing more companies to start, or improve, their ESG reporting. We are certainly proponents of more, and better, ESG reporting, and have analyzed countless examples of some of the best and the worst reporting. We try not to provide blanket recommendations across all companies as these would be so lacking in detail as to be inactionable. With that in mind, however, there are two key recommendations that do apply across all companies and sectors:

• Beware of unit conversions: ESG is a practice in measurement and unit conversions are one of the most common sources of errors.

• When in doubt, disclose: No company is penalized for disclosing more, but many are for disclosing too little.

At Motive, we believe that companies have an outsized impact on the world around us. No other entity in modern society can more positively or negatively shape our world, and it is our mission to help companies be part of a better world.

The Being Intentional newsletter began as an experiment that started as an internal investor update and morphed into what you see today. Over time this newsletter began to reflect Motive's increased focus on helping corporate ESG and Sustainability leaders directly, and we continue to march steadily down that path.

This newsletter aims to bring timely and helpful information to people building and leading ESG and Sustainability programs within their company.

We certainly know that not all of you are leaders in ESG or Sustainability programs at large companies. Some of you are involved in ESG and Sustainability in other capacities, and some of you are simply interested in this space (and some of you are just here to support us! Thank you 🙏). Whatever your reason for being here, we strive to provide content to help you.

Here's to a great 2022, and thank you all for being part of this grand experiment!

What We Are Seeing

If you've been following Sustainability and ESG, it would be nearly impossible to miss the fact that it has grown significantly in public and market interest throughout 2021. If you are new to Sustainability and ESG, don't think that you are late to the game as it seems there is plenty of growth yet to come!

We monitor news and social media throughout the world to measure the salience of different issues. Across 2021, we can see that interest in Sustainability has grown markedly. With the low-end of approximately 25,000 average mentions per day at the beginning of 2021 and closing at a high-end of approximately 38,000 average daily mentions at the end of 2021, Sustainability returned a daily average of 31,400 daily mentions throughout 2021.

Related to sustainability is the growth in interest in ESG. Sustainability and ESG are closely related but still distinct in certain key ways. One way to look at it is that sustainability is a cultural concept whereas ESG is a series of performance indicators reflective of corporate culture and structure including elements of sustainability. Even though ESG communicates to a narrower audience than does the concept of sustainability, the term still grew markedly in salience throughout 2021. With the low-end of approximately 7,000 average mentions per day at the beginning of 2021 and closing at a high-end of approximately 17,000 average daily mentions at the end of 2021, ESG returned a daily average of 11,600 daily mentions throughout 2021.

ESG is not only growing in salience with the public but also among boards of directors and investors. PIMCO, the global investment management company, has been measuring the use of the term ESG in corporate earning calls across 10,000 global companies since May 2005. From May 2005 to May 2018, ESG mentions stayed flat at 0%-1% of calls. By May 2019, ESG mentions took-off, hitting 5% of calls…and now into May 2021, ESG mentions rocketed to 19% of calls.

This is great news for those of us committed to sustainability and ESG, and the trends in the data demonstrate signs of continuing. Sustainability is now business strategy…and the world is taking note.

… Just for fun, and to add a touch of context, here is the graph from above with the salience trendlines for sustainability and ESG with an added trendline for self-driving cars.

If public and market attention are indicators, then I’d prefer to be in sustainability and ESG rather than in self-driving cars!

The Business of Sustainability

Bloomberg Article: Bank Fees for Green Debt Surpass Fossil-Fuel Financing

This was big news that may have been swept away in the torrent on New Year’s retrospectives and forecasts. In short, 2021 was the first year that banks earned more fees arranging sustainability-related bond sales and loans (i.e. green bonds) than they did arranging financing for fossil-fuel companies.

Banks collected $3.4 billion in fees arranging green debt in 2021, compared to $3.3 billion in fees arranging fossil-fuel debt. In shocking context, fees collected in 2020 were $1.9 billion from green debt and $3.7 billion from fossil-fuel debt. The story is not that fossil fuels have become too risky, but rather that interest in sustainability has grown exponentially.

In an earlier newsletter, we discussed how important it was to the broader sustainability transition when Maersk Shipping offered a green bond which was immediately over-subscribed and closed at a lower interest rate than its previous traditional (non-green) bond. This news that banks are now profiting more on green bonds than on fossil-fuel financing is even bigger news supporting the broader sustainability transition.

Looking at the list of banks profiting the most from green debt and from fossil-fuel financing (listed in the original linked article) would suggest that these banks are not necessarily motivated by a moral commitment to sustainability but rather have identified that green debt is a market that they most certainly cannot afford to miss out on.

Capital has acknowledged that sustainability matters and change is accelerating. Analysts at Bloomberg now predict that $2.5 trillion of debt identified as green or ESG-oriented will be issued in 2022, up from $1.5 trillion in 2021. At this rate, bank profits should be quite secure.

Sustainability is no longer a fringe concern, it is business strategy.

CSR Spotlight: Aramark

(PDF Report) Link Here

(web) Link Here

Chances are you engaged with Aramark in some way recently even if you were not aware of it. With over 247,000 employees, the company is a keystone partner in service networks, including food, facilities, and uniform services. Schools, colleges, sports venues, workplaces, healthcare settings--wherever food and hospitality show up there is a strong chance Aramark is involved. 

We were eager to dig into their newest sustainability report, but unfortunately, it wasn’t really worth the wait.

What We Liked:

• Sustainability at Aramark is framed against the UN Sustainable Development Goals (SDGs). This helps provide parameters to understanding Aramark’s efforts and context to how these efforts are communicated. The SDGs are not the only framework, nor necessarily the most appropriate for all companies, but nonetheless, it is nice to see Aramark working within a clear framework.

What’s Missing:

• Just about everything…

• No clear materiality assessment: The company is taking steps toward sustainability, but we are not sure exactly why they are doing what it is they are doing. When we think of the sectors and markets they are active in so many possible issues of consequence come to mind but yet remain absent in the company’s reporting.

• Lack of Depth: The efforts and outcomes that are reported are what we refer to as light-touch sustainability. It’s not greenwashing--the company is taking real steps--but it is all so little compared to what they could be doing. If you had a group of friends all talking about how they were switching into electric vehicles, installing solar panels, and shifting their purchasing to local farm-based outlets, Aramark would be the friend mentioning they were thinking about maybe changing over to CFL light bulbs in their reading lamps. Sure it’s a start, but advances over the last decade make it possible and reasonable to expect so much more. Not every company needs to be a sustainability leader, but they also can’t pretend that there aren’t decades of progress to build upon.

• Missed Potential: Aramark may not be a household name, but it is a keystone actor in global supply and service networks. Very few companies have as much leverage and connection with suppliers, regulators, clients, and individual customers as does Aramark. This positions the company to be a market-maker in any area it wants to focus on…but it certainly is not acting like it. It’s possible the company is building up to stronger actions in the near future, but for now, it seems like Aramark is not willing to put its weight behind its sustainability efforts. We can’t help but feel that sustainability is not a business strategy at Aramark.

What We Are Saying

Blog Link: It’s All Material…Unless It Isn’t

Materiality assessments are key components for corporate sustainability teams in developing meaningful programs and policies. Sustainability is a remarkably vague concept and materiality assessments are a great resource to start establishing actionable parameters…but many assessments, as currently performed, don’t really help in the ways we would hope. The priority of the assessment should be to inform your strategic planning and not simply to assist as PR collateral.

Welcome to the final edition of the Being Intentional newsletter for 2021. As we head into the final stretch of the year we wanted to take a moment and reflect on what 2021 has meant to all of us within the sustainability community. It’s exceptionally easy to get overwhelmed by negative news or fall into a trap of believing that we’re not making a difference. Now is a great time to take a step back and look at all the great things that have happened over the past year. 

With our focus on helping companies make better, more informed sustainability decisions, there are two metrics that really jump out when we look at 2021: 1) the number of entities (largely corporations) that have made commitments to a net-zero future, and 2) the rise of executive-level sustainability professionals within companies. 

2021 was a banner year on both fronts. With regard to net-zero, 2021 saw a 231% increase in commitments over 2020. While it’s important to understand that committing to net-zero is not the same as achieving net-zero (we discuss this in greater detail later in the newsletter), it is a sign that companies are waking up to the fact that they have a huge part to play in making the world a better place.

This fact is further illustrated by the 228% increase in Chief Sustainability Officer roles within companies. That increase makes the CSO role the fastest growing executive role within the Fortune 500. Furthermore, this figure only takes into account roles with that specific title. When you factor in the overall growth within corporate sustainability programs and teams, it becomes clear that sustainability is here to stay. 

We fully expect 2022 to continue where 2021 left off and see companies pushing even harder into sustainability than ever before, either because of financial pressure, government regulation, or consumer demand. Winners and losers are going to be increasingly determined by those that make sustainability part of their business strategy and those that do not. 

So here’s to a wonderful New Year. We are grateful for your time and support. 

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What We Are Seeing

The 2021 word of the year in corporate sustainability must surely be ‘net-zero’...but before companies double down on their net-zero statements, we should point out that the word of 2022 is likely to be ‘decarbonization’. (OK, it may be a bit early to declare the 2022 word of the year).

What does this all mean for corporate sustainability teams heading into 2022? 

At the beginning of 2021, public interest in net-zero and decarbonization were remarkably similar, as measured by the volume of news and social media mentions, with decarbonization just edging ahead of net-zero. As net-zero plans emerged and were promoted, interest in this approach took off, as seen in the trendline below. Public interest in decarbonization grew along with interest in net-zero, but not as dramatically.

As net-zero came to prominence, the first cohort of companies to release commitments were celebrated for their ambitious leadership and the second cohort celebrated for their commitment to collective action, and then by this time COP26 was coming round and net-zero statements started flowing like water. 

So much was made of net-zero by the business and finance community at COP26 that its sheen started to dull and suspicions started to grow. Now net-zero is widely perceived as the baseline expectation of corporate climate plans by many stakeholders…or simple greenwashing by many others.

Net-zero was born as a strategy to minimize the amount of carbon and other greenhouse gases externalized into the atmosphere. The idea was companies would seek to reduce their emissions and thereafter offset any emissions they could not reduce so that there would be no net increase in the absolute levels of carbon and greenhouse gases in the atmosphere.

Since gaining such widespread traction, however, many have criticized net-zero plans for placing too much focus on offsets (often dependent on unproven technologies) and not enough on emissions reductions in the first place. For many, net-zero has become a fancy accounting trick to allow business-as-usual, and in this sense, actual decarbonization is preferred to net-zero.

Public interest in net-zero was certainly fueled by the COP26 gathering where we were all informed months ahead of the event itself that net-zero would feature prominently. So what do we see post-COP26?

Public interest in net-zero persists, although growing more slowly than before. But, and most interestingly, public interest in decarbonization begins to accelerate, growing much faster than interest in net-zero and likely soon to match and eventually surpass the latter.

Heading into 2022, it is important for corporate sustainability teams to take note of these trends--Net-zero plans extending over 20 or 30 years are significant commitments shaping stakeholder expectations, so best to get it right!

What we are seeing is that net-zero on its own is not going to do much heavy lifting for you. Net-zero plans are still generally well-received by consumers and investors, however there is a growing focus on what these plans actually entail. The balance of emissions reductions vs. offsets will be critical to success, with the public increasingly favoring the former. 

If you already have a net-zero plan, then it may be time to reflect on how it is balanced and how it can be most effectively communicated. If you don’t already have a net-zero plan then maybe don’t rush into one--a decarbonization plan may be a better route for you to explore. Net-Zero emerged out of an interest in managing carbon emissions, but now it seems this interest has moved from managing emissions to eliminating emissions. 

Decarbonization is the emergent theme to center on. The trend in public interest since the completion of COP26, which ended mid-November, is limited in time so far, but this is a development, among many others, we are keeping a close eye on.

Business of Sustainability

The ESG Mirage (Link)

Last week brought about the release of a significant piece of investigative journalism in the ESG world. The piece, appearing in Bloomberg Businessweek and titled “The ESG Mirage”, was proclaimed (or maybe promoted?) as a ‘bombshell’ article sure to rock the industry. And if it is going to rock the industry, then this is something we all need to take seriously as ESG and corporate sustainability programs now walk hand-in-hand (even if at times begrudgingly).

We encourage everyone to read the original article. It provides an excellent overview of the debates and challenges in the ESG field from the past 10+ years and serves as a great opportunity for us to remind everyone that investing in companies with ‘good’ ESG scores is not necessarily the same as investing in companies working toward sustainability.

But… it is not a bombshell.

In brief, MSCI is one of the world’s largest ESG rating agencies which not only provides ESG data and ratings to investors and asset managers but also constructs indices to which countless ETFs and related investment products are indexed. In this sense, MSCI is arguably the most formative player in the ESG ratings field right now--active investors are using their data and passive investors are shadowing their data (with possibly 60% of the money flowing into ESG space linked to MSCI data in some way, as explored in the original article).

The big reveal in the Bloomberg Businessweek piece is that the MSCI methodology does not in fact correlate corporate activity to impacts on people and the planet, as many people newly interested in sustainable or impact investing had assumed, but rather it correlates environmental, social, and governance risks to corporate bottom lines. MSCI data and ratings are not about the impacts of companies on the world, as the article expertly demonstrates, but rather about the impacts of world affairs on company profitability…and so investing in companies with ‘good’ ESG scores is not necessarily the same as investing in companies working toward sustainability.

This big reveal is only a reveal if you’ve jumped into sustainable or impact investing without reading much about sustainable or impact investing. MSCI--and all other major ESG rating agencies (including Bloomberg)--operate from a position of measuring the risk exposure of environmental, social, and governance developments to company profitability. If an issue is not material to a company’s bottom line then it does not rate. Even if a company has a material impact on an issue but this issue is not material to the company’s bottom line, then it still does not rate. ESG materiality has always been a one-way street. Read the methodologies of any of the data providers and this is abundantly clear.

What the Bloomberg Businessweek article does get right is that MSCI has been pushing the limit on their marketing materials to the point that someone who was not going to read the rating methodology or perform any meaningful due diligence would likely (and inaccurately) assume that MSCI ESG scores were a reflection of sustainability. Contrary to much reactionary social media commentary, the piece does not highlight any flaws or errors in the MSCI process or products, but it does certainly make the case that MSCI is guilty of greenwashing in their marketing.

ESG was never about sustainability. It has always been about incorporating more information into decision-making processes. These processes could certainly be geared toward advancing sustainability but they do not inherently need to be either. ESG is data, what you use this data to accomplish is up to you. 

Recent interest in ESG, from the retail investor level in particular, has muddied the waters and conflated ESG with sustainability, impact, and social responsibility …and marketing departments have been far too eager to take advantage of these oversights, misunderstandings, and impulses. The data is sound, but the marketing departments are nefarious.

We do not expect much to change as a result of this piece for three principal reasons. First, institutional investors and asset managers are the most important client sector for MSCI data and ratings and these clients were fully aware of the MSCI methodology (and those of all other major ESG rating agencies). This was not news to them.

Second, most people who were shocked at this news were people who were passively investing in ‘sustainable’, ‘impact’, or ‘green’ ETFs which were benchmarked against MSCI indices. But that they were shocked suggests they hadn’t read the full prospectus nor the methodology supporting the ETFs they were opting into. They wanted a quick, easy, and cheap entry to impact investing and now discovered that there is nothing quick, easy, or cheap about true impact investing. So maybe a few people adjust their portfolios and seek more active alternatives, but nowhere near the exodus required for these ETFs to fall.

Third, retail investors leaving passive MSCI-indexed ETFs in search of true impact investing options would serve as a great signal to the fledgling ESG sub-industry which is actually providing data about how companies impact people and the planet. MSCI may not provide such data, but there are a few start-ups that do. Growing investor demand for such data would be the signal this sub-sector needs to be able to break free from the sidelines and grow into a more mainstream offering alongside traditional inward-focused ESG data providers. When this happens, it will be additional to existing ESG data providers and bolster the entire industry rather than replace the likes of MSCI.

We think this is important to note because investigative journalism that would ‘rock the ESG industry’ and pull the rug out from under MSCI--arguably one of the most important actors in the space now--would be critical to all corporate sustainability officers and ESG leaders. Most, if not all, public companies shape their sustainability and ESG programs and reporting to the practices of the ESG rating industry. A revolution in the rating industry would catalyze a revolution in corporate sustainability programs. 

This particular piece is an excellent primer on many of the debates and challenges within the ESG industry but it is not the spark of change some may have hoped.

CSR Spotlight: Del Monte Foods, Inc.

Sustainability Reports | Del Monte Foods, Inc. (Link)

Every day is another opportunity to read newly released CSR reports, and this week we read one that really stood out. It wasn't just one of the better ones over the last couple of weeks, but it is one of the best we have read all year.

Not only is Del Monte Foods, Inc. one of the largest U.S. producers and distributors of branded food products widely recognized for their canned fruits and vegetables (anybody up for a side of French-style green beans?), but it is also one of the most active in addressing their impacts on people and the planet. There will always be impacts associated with large-scale food production (in fact, with all scales of food production), but the Del Monte Foods 2021 Sustainability Report is demonstrating how a company can show accountability in these impacts.

What We Like: 

• A Clear Materiality Assessment: The sustainability report doesn’t only build upon a materiality assessment but actually opens with a materiality assessment. From the beginning, we know what Del Monte is focused on improving, why, and how. Opening with such a clear materiality assessment and discussion sets the framework for evaluating everything else in the report. Rather than stick it away in an appendix, or refer to it as a separate document, the 2021 Sustainability Report is shaped around the materiality assessment--this provides much context which is often lacking in many other sustainability reports.

• Objectives and Metrics: All discussions are developed in the format of presenting an objective and providing data discussing if/how the objective was achieved. It couldn’t be more clear.

• Reporting frameworks: The 2021 Sustainability Report is prepared in line with SASB and GRI reporting frameworks. Del Monte Foods, Inc. goes even one step further and provides a SASB and GRI data index within the report directing readers to relevant sections of the report or additional documentation and disclosures.

What We Would Like:

• More of this! This is one of the best Sustainability Reports we have read this year. There is always room for discussion on the rate of improvement of certain metrics, or the inclusion of others, but these are simply subjective considerations. From considerations of process and reporting, Del Monte Foods, Inc. is a clear leader that we hope more companies, from the food and agriculture sectors and beyond, will emulate.

What We Are Saying

Your Sustainability Mission Statement is Not Helping (Blog Link)

Nearly every company has a sustainability mission statement today…but these are not nearly as helpful as many companies think. Sustainability mission statements actually meant something in the 1990s and early 2000s when sustainability was beginning to trend, but the times--and markets--have changed. The same statements that were once celebrated are now failing you. The question is no longer if you believe in sustainability but rather what are you doing about sustainability. It is time to progress from sustainability mission statements to materiality statements, and these will establish the framework by which your efforts are evaluated. Do not miss the opportunity to control your own narrative.

Welcome to another edition of Being Intentional. Thank you to everyone for your continued support. If you find this newsletter interesting please consider sharing it. 

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What does sustainability mean to you? 

Sustainability has gone mainstream of late. It’s nearly impossible to read any news section, be it Current Affairs, Business, and Finance, Politics, Science, Legal, Society, and Community, or Opinions, and not come across the term. Even if you don’t follow any specifically-associated hashtags on social media, ‘sustainability’ will still make its way into your feed. It is such a beautifully vague and aspirational concept that today it is showing up everywhere.

We work in the ESG and corporate sustainability space and our days are filled with the finer details and messy workings of policies, regulations, metrics, impacts, materiality, and program developments around sustainability. Yet whenever we hear or read the word, we often picture rainforests and tree frogs, community wells and smiling children, and so much other imagery associated with the UN Sustainable Development Goals. For a quick second, it’s all soft and fuzzy...for a quick second, sustainability is about the feel-goods. (Maybe this is because we grew up in the 80s surrounded by passed-along copies of National Geographic).

Is this how sustainability is framed? Is this fueling the exponential rise in interest in sustainability? Not quite...at least not explicitly so.

A great way to better understand a concept that has been purposefully developed in such elegant vagueness is to take a quick look at other keywords which are used when discussing the concept. And we did just this for sustainability. 

Our Dynamic Materiality application helps us make sense of how people perceive various issues. In this case, we wanted to see what the Dynamic Materiality application had to say about 'sustainability.' Looking back at global news and social media mentions in 2021 so far, we retrieved over 10.7 million articles and posts. This breaks down to an average of 15.6 thousand news articles per day and 16.2 thousand Twitter mentions per day (as we said, sustainability has gone mainstream!).

Here are the top keywords associated with sustainability:

In fact, the only keyword with any sort of ecological connotation comes in at #10. Expanding our view, Climate Change would come in at #11, Planet at #18, and Water at #24--all interspersed with the keywords of Growth at #12, Technology at #16, and Investors at #22.

Paraphrasing these keywords into themes would suggest sustainability is about corporate transparency in delivering new products and developing new markets for a better global future.

Sustainability has out-grown its warm-and-fuzzies. It is still aspirational in nature but it is no longer driven by feel-goods, it's driven by market imperatives. 

Sustainability has gone mainstream. Sustainability is a business strategy. Now…what does sustainability mean to you?

The Business of Sustainability

Shareholder resolutions are typically big news, but As You Sow’s (Link) recent success at the Sysco annual general meeting did make a few headlines. 

As You Sow is a non-profit organization that works with investors to drive companies to a more sustainable future through the use of shareholder resolutions. Their most recent target was Sysco (Link)--and the resolution asking the company to establish Paris-aligned net-zero targets and an associated climate transition plan received over 92% shareholder support.

As impressive as this is, it wasn’t the only such resolution to gain favor throughout the 2021 proxy season. So far this year, As You Sow has worked with shareholders to file a total of 86 distinct ESG-type resolutions seeking action on issues such as climate change; diversity, equity, and inclusion; human rights; plastic pollution; and executive compensation. What’s really neat is to compare the organization’s efforts and successes in 2021 to those of 2016 spanning a convenient 5-year window.

What really stands out here is that:

1. The total number of ESG-related shareholder resolutions nearly doubled over five years.

2. Resolutions with a ‘social’ focus have really developed of late, growing from a base of 0 only five years ago.

3. A larger proportion of resolutions are being withdrawn, signaling that companies are willing to engage in meaningful discussions and agreements instead of proceeding with a resolution vote. (Withdrawn resolutions are typically a good sign as only the filer can withdraw the resolution).

4. Many resolutions which proceeded to a vote actually achieved majority support-something which never happened in 2016. In fact, four of the seven resolutions to receive majority support were filed with large companies such as Dupont, General Electric, Union Pacific, and Sysco and all received >80% support.

5. In total, over 65% of ESG-related resolutions were either withdrawn or received majority support upon voting.

Of course, the sample of resolutions supported by As You Sow is inherently tilted toward ESG themes given the organization’s mandate. But the observations above still stand even when we expand the sample beyond ESG-focused filers.

The ProxyMonitor (Link) is another non-profit organization, yet one which tracks the outcomes of all voted resolutions filed with Fortune 250 companies. This organization is not collaborating with investors to file resolutions, nor does it maintain a distinct ESG focus, rather it provides resolution tracking for market information purposes.

In 2021, Fortune 250 companies voted on a total of 506 shareholder resolutions (excluding blocked or withdrawn resolutions), and of these 112 were ESG-related fitting with the themes discussed above. This number is actually down relative to the total of 162 such resolutions in 2016, but what is interesting is that far more resolutions are receiving majority support in 2021—a full 22 ESG-related resolutions— compared to 2016 and these resolutions now cover topics such as climate reporting, targets, and outcomes; diversity, equity, and inclusion; climate lobbying; and lobbying and political spending. In contrast, only two resolutions ESG-related resolutions received majority support in 2016, and these related to animal rights and lobbying/political spending.

Notably, all climate- and diversity-related resolutions at Fortune 250 companies failed to achieve majority support in 2016, yet these two categories now represent more than half of all majority-supported ESG resolutions in 2021.

That ESG-identified investors are filing ESG-linked shareholder resolutions is not shocking, but what is truly notable is how successful these resolutions are becoming. To gain majority support in a vote requires that many(!!!) investors who do not self-identify as ESG investors also vote in support of the resolution.

ESG resolutions were once opposed as agenda-setting efforts by fringe activists. Today, ESG resolutions are supported by a wide diversity of mainstream institutional and retail investors. Why? Because everyone is now coming to realize that good ESG and sustainability performance is good business, and good business makes for good investments.

CSR Spotlight: Palo Alto Networks

Palo Alto Networks recently released their 2021 Environmental, Social, and Governance Supplement (Link). Although Palo Alto Networks has been actively managing their ESG profile for years, this is their first distinct ESG report. Digital tech companies, in the relative absence of much physical infrastructure and production, can sometimes get a  little creative in their ESG reporting, so it was very interesting to see what Palo Alto Networks has been up to.

Spoiler alert: What they have been up to is impressive! Our job would be much easier if more companies followed Palo Alto Network’s lead in reporting.

What we like:

• Clear materiality assessment including stakeholder engagement: It is clear what they are focusing on and why. Not every company can address everything, so knowing where and why Palo Alto Networks is focused is helpful. Transparency is great.

• Clearly identified chain of accountability:  Palo Alto Networks has a committee of the Board of Directors to provide oversight of ESG strategies (although this committee does have split responsibilities), along with a dedicated senior executive in charge of the ESG program and an identified chain of command throughout the executive ranks...and all with compensation linked to ESG performance. ESG is not a side-project here.

• Clear definitions: So many words like ‘sustainability’, ‘net zero’, ‘diversity’, ‘inclusion’, and so on are just vague enough to leave companies enough wiggle room to claim success no matter what comes from their efforts--but not in this case. Palo Alto Networks is clear in what they mean and how they intend to achieve it.

• Legitimacy: Associating key metrics, programs, and initiatives with independent third-party verification, such as backing emissions programs with the Science-Based Targets initiative, shows Palo Alto Networks is open to collaboration and critical oversight. 

• Transparency: Provision of data and links to all supporting material and associated policies is helpful. Trust but verify.

What we would like to see:

• Integrated Reporting: As Palo Alto Network’s first dedicated ESG report, this is an excellent start. We would like to see this material more comprehensively tied in with the company’s annual report. Rather than an ESG supplement, it would be great to see full-scale integrated reporting. “Our business vision and ESG strategies are closely aligned”, states Nikesh Arora, CEO & Chairman, Palo Alto Networks--and this recent report would suggest this statement to be authentic--and a shift to integrated reporting would be a great opportunity to more clearly explore how the company is incorporating their ESG decision-making framework into business strategy and success.

• Board Focus: Over time, it may be advisable to reorganize the oversight committee among the Board of Directors. ESG is complex and Palo Alto Networks is demonstrating great initiative and growth in this field. A dedicated ESG committee chaired by Directors elected on the merit of their expertise in this field may prove beneficial to the company.

What We Are Saying

Who Reads Sustainability Reports? (Link)

Companies write ESG and Sustainability reports under the framework of ‘telling your story’, painting a picture, or ‘sharing a vision’ in the hopes of reaching customers, investors, employees, communities, and regulators. Please don’t shoot the messenger...but these intended audience members do not read sustainability reports. Algorithms and hyper-focused research analysts (like us!) read reports and intermediate the content for all other stakeholders. So rather than write for your intended audience, why not optimize for your actual audience? Sustainability reporting has never been in such high demand, it’s time to enhance the ROI of these reports.

Sustainability is part of business strategy. The past week provided another clear example of just how important sustainability has become from a business perspective. 

Last week Danish shipping behemoth, Maersk, floated a bond on the European Bond Market raising $US566 million. Issuing a bond isn’t particularly remarkable—debt financing is an efficient way for public companies to raise funds—but this bond issuance was different and important for the world. 

Here’s why: 

• The money is being used to help finance the purchase of 8 new methanol-fueled ships. 

• The bond is part of Maersk’s Green Finance Framework, which is specifically targeted at funding the company's carbon neutrality initiatives.

But here’s the really remarkable part… 

• The company issued the bond with a 0.75% coupon—its lowest rate ever!

• The deal was the most subscribed of the week in the European bond market. In fact, it was over-subscribed!

To recap: Maersk was able to raise money at a lower cost of capital to fund its transition to more sustainable shipping vessels in a move to decarbonize its shipping operations to appeal to a broader base of investors.

From the company’s CFO, Patrick Jany:

“With this green bond, we aim at diversifying our investor base by reaching out to new investors and increasing the transparency of our environmental, social, and corporate governance (ESG) ambitions and performance even further towards our stakeholders.”

There is no public company CFO that didn’t take notice of Maersk’s success. The economics are simply too powerful to be ignored. Once again, sustainability is part of business strategy.

Thanks for being a reader of Being Intentional. We are grateful for your ongoing support. If you find this newsletter interesting please consider sharing it. 

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What We Are Seeing

This will be our last note about the COP26 climate conference in Glasgow (we think!). But this is not a note to dissect the Glasgow Climate Pact, as the final agreement text is known. Rather, it is a note to all companies and asset managers with a simple message: be prepared for more engagement on climate and sustainability--from regulators, investors, consumers, and community stakeholders.

COP26 has wrapped up and the ever-plentiful post-mortems have been circulated (and more are still coming through). Whether you believe the Glasgow Climate Pact is a failure or a success depends largely on how you view the risks of climate change in relation to your views on the nature of national governments.

Having read through more than three dozen of the most widely circulated analyses and opinion pieces, one distinction stands clear to us. For those who approached COP26 as an opportunity to meaningfully address climate change, the Glasgow Climate Pact is, in all intents and purposes, a failure. Yet for those who approached COP26 as a practice in multilateral governance, the Glasgow Climate Pact is a clear success.

On the one hand, the agreement falls far short of limiting emissions within the IPCC-supported timeline, yet on the other hand, it succeeds in building common ground among nearly 200 nations of varying, and often competing, respective interests, cultures, contexts, and experiences. The Glasgow Climate Pact does very little to address climate change but a lot to justify continuing global cooperation and coordination. Bittersweet, we suppose.

In our media tracking, mentions of #COP26 or #GlasgowClimatePact have all but disappeared. The conference is over and the outcomes are not impactful enough to hold everyone’s attention. Yet we are also seeing the rise of new trending discussions tagged with #COP26Failure, #COPout, and #BlahBlahBlah (a reference to Greta Thunberg’s admonition of elected leaders’ empty promises and no action).

What we are seeing in these discussions are requests for guidance. People invested great urgency and activism into COP26 framing it as a last opportunity to avert the worst impacts of climate change, and the resulting Glasgow Climate Pact leaves them feeling abandoned and rudderless. 

What we are seeing in response to these requests for guidance are calls to forget about multilateral organizations and elected leaders that have disappointed the climate movement time and time again, and instead to go straight to the levers of power and enact change directly. The levers of power being the markets.

All corporate sustainability and ESG teams should be preparing themselves for this shift. Consumers and investors want sustainability, soon they will be wanting more sustainability...and faster, and with more transparency and accountability. The activism and engagement tactics of the climate movement are going to help focus the attention of consumers and investors--on key issues and key targets--as well as generally super-charge the consumer sovereignty movement.

This all means more engaged stakeholders, more boycotts, protests, walk-outs, divestment campaigns, and shareholder activism. Robust sustainability programs, good ESG and CSR, and transparent and responsive engagement are the new currency in this market shift. While sustainability was once a marketing advantage it is quickly becoming a full-scale competitive advantage. The transition has already begun, and the perceived failure of COP26 is now accelerating it. Plan accordingly.

The Business of Sustainability

We like to say that sustainability is no longer a side project, it's business strategy (...we may have just said that in the previous section…). A recent article exploring the cost of capital of oil and gas projects provides a supporting case for this claim.

As reported in this Bloomberg article (Link), about ten years ago, the cost of capital for developing oil and gas projects was comparable to that of renewable energy projects--all around 8-10%. Yet today, oil and gas projects need to demonstrate returns on equity exceeding 20% while renewable energy projects only 3-5%.

This divergence in the cost of capital is significant and is reshaping the entire energy industry.  As Will Hares, an analyst at Bloomberg Intelligence states:

“Oil companies are finding it increasingly difficult to raise financing amid rising ESG and sustainability concerns, while banks are under pressure from their own investors to reduce or eliminate fossil-fuel financing.”

All else aside, developing new oil and gas projects simply doesn’t make sense--the cost of capital is simply too high relative to the viable alternatives. It’s not about values, morals, or investing for future generations (although all of these are good and we support them!), it’s simply about basic economics--and the numbers no longer make sense.

Although today this transition is most obvious in the oil and gas sector, we expect to see these same pressures playing out across all industries in short order. The demand for ESG investment products and services has absolutely boomed over the last few years. ESG assets now total $35 trillion globally, up from $22.8 trillion in 2018, and are anticipated to exceed $50 trillion by 2025 (Link). This trend is also clear in consumer markets. A full 54% of growth in the consumer packaged goods market is derived from sustainability-marketed products and these products grew at 7.1X faster than products not marketed as being sustainable (Link). In short, people care about sustainability and they want their investments and purchases to reflect these values.

The transition afoot in the energy sector should serve as a cautionary tale to all others thinking ‘sustainability is just a trend’. Sustainability can no longer be approached as a side project, it must be engaged as business strategy.

CSR Spotlight

Nearly all companies--over 90% of all S&P 500 companies, impressively--publish an annual Corporate Sustainability Report. Varying release dates mean we get new reports every week! CSR Reports are an excellent way to see how companies think about themselves...and how they want to be thought of. We read all the CSR reports we can find and share one that we think serves as an example of best practices or as a cautionary tale.

One that stood out to us for positive reasons was from Hormel Foods (Link)

Hormel Foods is among the world’s largest food manufacturers with over 19,000 employees and products sold in 80 countries. We are familiar with Hormel from a few pizza toppings in our fridges and cans of chili from recent camping trips, but we were not familiar with how well developed their sustainability and responsibility programs were.

What we liked:

• Transparent reporting. We felt we could trust what we were reading.

• Third-party verified data. Knowing the data that supports this report was verified adds even more to our trust in this report and the sustainability processes at Hormel Foods.

• Clearly Identified Short, Medium, and Long-term Goals: These mixed timelines show the company is not simply kicking the can down the road.

• Goal-Specific Metrics: These metrics demonstrate the goals are more than just words and hopes. You manage what you measure.

• Materiality: Nearly everything Hormel Foods is doing is clearly tied to a topic or area that the company can have a meaningful impact in or that can have a meaningful impact on the company. 

What was missing:

• Scope 3 Emissions: Hormel Foods is advancing meaningfully in emissions reduction and renewable energy use, but we couldn’t find much discussion--or action--regarding Scope 3 emissions. Companies are uniquely positioned to be able to address Scope 1, 2, & 3 emissions--leaving any of these off the table raises concerns.

• An Actual Report: The Hormel Foods ‘report’ is actually a series of interlinked web pages. We understand that this makes it easier for the company to update certain sections as needed without having to reissue the entire report and it also allows them to track website visitors to see who is interested in what. But for the reader, it is a much less accessible format. It requires a suitable internet connection and it is so easy to miss entire sections or to get lost after a few clicks not knowing if you finished a section or the entire report. The option to download a .pdf version of the report would be great. Downloading a report also makes it easier for those of us who are interested in benchmarking performance year-over-year. Maybe a download option was there and we simply missed it...but we did spend a lot of time on the site...

What We Are Saying

The Headline Was Not The Story: (Link)

In this week’s blog:

• A recent global survey reports “few people are willing to change their lifestyle to save the planet”–this is a misleading statement serving as a sensationalist headline.

• The survey really shows that 1) people do not believe companies are committed to preserving the environment and the planet, 2) that a majority of individuals are taking actions to save the planet, and 3) many people want more guidance in doing so.

• This is a great opportunity for companies to re-frame their corporate sustainability efforts and communications: Don’t speak of the great things you are doing (people don’t believe you anyway), rather speak of how what you are doing supports others in doing great things.

It would be impossible to draft this newsletter and not talk about COP26, the United Nations “Conference of Parties” held by the United Nations Framework Convention on Climate Change. As the name implies, this was the 26th year of the conference (COP1 was in 1995).

Key Takeaways:

1. Twenty-three countries made new commitments to phase out coal power. Included in this list were five of the world's top coal power-using nations. (link)

2. India sets a 2070 target for net-zero emissions. India is currently the 3rd largest emitter of greenhouse gases, so if this holds up, it will be a significant victory. (link)

3. Banks and asset managers have formed the Glasgow Financial Alliance for Net Zero--representing 40% of the world’s financial assets, or $130 trillion of assets--pledging to meet the goals set out in the Paris climate agreement. Members must use science-based guidelines to reach net-zero carbon emissions by 2050 and provide 2030 interim goals. (link)

4. 90 (and counting) countries have now pledged to slash methane emissions by 30% by 2030 as part of The Global Methane Pledge (link)

5. 110 world leaders promise to end deforestation by 2030 (link)

The REAL key takeaway here is we are 8 (short) years away from many of these commitments coming due. Whether they are realistic or not, it’s pretty clear that there will be an immense amount of pressure to make progress in these areas. Many of these commitments are only achievable through significant contributions from the private sector, so when you read “World Leaders Commit to X” translated, that means “Governments will incentivize and de-incentivize private markets.” These contributions represent both massive opportunities for the world’s companies, as well as real-world challenges. Companies who integrate sustainability into their business will no doubt be the beneficiaries of the future incentive plan. 

We appreciate you’re help and support. If this newsletter s interesting to you, please consider sharing it.

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What We Are Seeing

Staying on the COP26 theme, we thought it would be interesting to look at the trends around COP26 and how it compares to previous years. 

We’ve been hearing and seeing so much about COP26 that we are starting to feel optimistic that we may be collectively mobilizing for a meaningful stand in adaptation and mitigation to one of the world’s most pressing challenges—climate change. But then again, sometimes we worry that everything we are hearing and seeing may be over-estimated due to the echo chambers of social media and like-minded colleagues…

Yet the data does show a reason for optimism! Up until now, the most important gathering of world leaders addressing climate change was COP21 in 2015, which resulted in the Paris Agreement. Looking at worldwide news searches, this year’s COP26 is pulling nearly 5X as much interest as the COP21 did at its peak and over 10X as much interest as the Paris Agreement upon being publicly released…and COP26 isn’t done yet!

More people than ever want to know what is happening. Climate change is no longer only of concern to scientists and activists—people care, the world is invested in this outcome.

Time for a Change

We are all big consumers of cloud computing. Granted, it’s not something we think about a lot. Still, whether you shop online, schedule a doctor appointment, or read this newsletter, you are likely using one of the three big cloud providers: Amazon’s platform, AWS, Google’s Google Cloud Platform, or Microsoft’s Azure. (@taylor links to a great open-source tool in his tweet below for people developing on one of the three cloud platforms). There are many other good platforms, but those three represent 61% of the total market, so we wanted to dig into each performance from a rating perspective.

Microsoft (RS: 19, ↑73%) (AskMotive, Microsoft’s Sustainability Site)

• 1.3M metric tons of carbon removal procured.

• Twenty water replenishment projects funded to date.

• 60K metric tons of waste diverted from landfills.

Google (RS: 2, ↓54%) (AskMotive, Google Sustainability Site)

• Carbon-free by 2030

• Replenish 120% of the water consumed by 2030

• Maximize the reuse of finite resources across operations, products, and supply chains

Amazon (RS: -7, ↓64%) (AskMotive, Amazon Sustainability Site)

• Reaching net-zero carbon emissions across operations by 2040

• Investing $2 billion to support the development of decarbonizing technologies & services

• 100% renewable energy by 2025

The Business of Sustainability

1. NYU Stern Report: ESG and Financial Performance (link)
   This meta-study aggregates over 1000 other studies to determine a correlation between ESG ratings and corporate performance.  

Key Takeaways:

• Corporations’ sustainability initiatives appear to drive better financial performance due to mediating factors such as improved risk management and more innovation.

• Improved financial performance due to ESG becomes more marked over longer time horizons. 

(NYU Stern report: ESG and Financial Performance)

2. McKinsey & Company Report: Diversity wins: How inclusion matters (link)
   The management consulting firm McKinsey & Company report makes the business case for increased diversity at the executive level. 

   Key Takeaways:

• The analysis found that companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the fourth quartile—up from 21% in 2017 and 15% in 2014. 

CSR Spotlight

Every week a new batch of companies are publishing their Corporate Sustainability Reports. In a new section of this newsletter, we’re spotlighting three reports we found interesting and why. CSR Reports are an excellent way to see how companies think about themselves. Click on a company’s name and view their CSR Report directly. 

JetBlue (No RealScore): Read JetBlue’s CSR Report Here

“In 2020, we proudly became the first airline to achieve carbon neutrality for all U.S. domestic flights. By offsetting carbon dioxide (CO2 ) emissions from jet fuel and flying with sustainable aviation fuel (SAF)”

Levi Strauss (No RealScore): Read Levi Strauss’ CSR Report Here

“In 2020, 83% of our cotton — our most used raw material — came from more sustainable sources, and we expanded our efforts toward a circular economy.”

Lenovo (RS: 21, ↑77%): Read Lenovo’s CSR Report Here

“Lenovo’s ESG initiatives focus on supporting a resilient way forward while creating long-term value for our stakeholders and meeting their expectations.”

What We Are Saying

ESG Rating Agencies Are Not Arbiters of Truth: With the surging interest in all things ESG, the ESG rating agencies have found new authority. The problem is that ESG is becoming synonymous with ‘sustainability’…and this is wholly inaccurate. ESG rating agencies are great at what they do, but what they do is not ‘sustainability’. Corporate sustainability programs should approach with eyes wide open.

Warning: This edition of Being Intentional is a bit on the long side. BUT… if you read it we promise you’ll learn something you didn’t know before. Isn’t that really all any of us can ask for anyway? 

If you want to jump right into the thick of things here’s what we’re serving up today:

• CSR Reports--it’s a new section for Being Intentional all about Corporate Sustainability Reports. We know they sound boring, but that’s because they are! We read them so you don’t have to and in this section, we spotlight some good and some bad. 

• Working remote, you say? Want to know how all those tech companies we love to hate so much stack up? Here it is!

• Want a good job? Get into sustainability. It’s a hot career as every company is jumping on board. Learn more in our What We Are Seeing Section. 

• In our Blog section, we go deep on greenwashing and seizing the opportunities in front of us. 

• Finally, we wrap up with some good reads, including a stunning Climate Change piece in The Guardian and COP26 101 for everyone wondering what the climate summit in Scotland was all about. 

We are grateful for your support. Our goal is to bring you insightful information that allows you to make more informed decisions. If this newsletter is useful to you please consider sharing it. 

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CSR Spotlight

Every week a new batch of companies are publishing their Corporate Sustainability Reports. In a new section of this newsletter, we’re spotlighting 3 reports we found interesting and why. CSR Reports are a good way to see how companies think about themselves. Click on a company’s name and view their CSR Report directly. 

Caesars Entertainment (RS: -27 ↓86): 

Caesar’s begins their CSR Stating: “Distributed $3.7 billion in economic wealth to our stakeholders, helping improve lives in our communities.” Also, “Caesars Entertainment, Inc’s GAAP net revenue was $3.47 in 2020.” Interesting how ‘distributed economic wealth to our stakeholders’ sounds so much better than saying ‘we paid salaries, a few taxes and regulatory fees, and plenty of shareholder returns’. This CSR Report is largely a collection of numbers that look good but are not provided with context so it’s difficult to understand if Caesars’ is actually getting better, or not.

Hormel Foods (RS: 36 ↑97)

Something we really appreciate about Hormel’s CSR Report is that they open their report with clear goals, which were particularly well structured and made understanding Hormel’s progress an easy task. Hormel’s high ESG ratings aren’t surprising. 

Southwest Airlines (RS: 10 ↑57)

Similar to Caesar’s Entertainment, Southwest leads with metrics that are debatable for inclusion on a CSR Report (“in 2020, and have, to date, opened or announced our intention to serve an additional 13 airports in 2021”). However, they do map to the United Nation’s Sustainable Development Goals (SDGs) and publish a transparent materiality map.

Additional companies pushing new CSR Reports since our last newsletter:

Medtronic, Flowserve, Olam Foods, Timken, Entegris, DigiPlex, AARON, BD, Aveva, ATCO, CBRE 

Time for a Change

Remote work, distant relatives, parents who snowbird, relocated friends, and the re-opening of global travel is keeping us all connected with people virtually, but how do the tech companies we rely on to make this possible stack up?

• Salesforce-owned Slack (RS: +34, ↑96%) clearly leads the pack, followed by Microsoft (RS: +19, ↑73%) with their offerings of LinkedIn and Teams. 

• Facebook (RS: +5, ↑50%),  including Instagram and Messenger, is rounding out the mid-pack alongside Google (RS: +2, ↓54%) with their GMail, Meet, and Chat. 

• Any and all of these four are showing far greater success in managing their impacts on the issues that matter than are Twitter (RS: -23, ↓82%) or Zoom (RS: -32, ↓91%).

What We Are Seeing

Sustainability is now a need-to-have and no longer just a nice-to-have...and don’t just take our word for it, listen to the trends in corporate development (as initially reported by the Weinreb Group.

Among Fortune 500 companies, the role and responsibilities of Chief Sustainability Officer have been the fastest growing executive function over the last decade, with demand for CSOs growing 228%. This trend is still gaining steam as more CSOs were recruited in 2020 than in the previous three years combined.

Along with the demand for CSOs has come equally impressive growth in the teams they manage, with the average sustainability team size growing over 300% over the same ten-year time period.

We work closely with CSOs and our last few conversations with some of these executives provide anecdotal support to these trends. All agree, at a  fundamental level, sustainability has shifted from community engagement strategy to full-scale business strategy. The next ten years should be exciting!

What We Are Saying

• Sustainability is a Mindset

  Sustainability has gone mainstream, but what may be perceived as best efforts by some are perceived as greenwashing by others. How can this be if we are all working meaningfully toward sustainability? To get to where we all want to be, we need to each be able to define what sustainability means to us. At Motive, sustainability is a mindset to guide our decisions with the aim of preserving collective optionality. So, what is sustainability to you?

• Don't Let Your Promises Fall Flat

  There is a deteriorating oil tanker floating abandoned off the Yemen coast with the potential to cause catastrophic humanitarian, ecological, and economic suffering, and no one seems to want to take leadership in addressing this issue. Rather, all are happy to talk about the COP26 climate summit to be held in Glasgow at the turn of the month and the great leadership we can all anticipate being shown. COP26 is being hyped as the environmental event of the year, but let’s not pretend that it is the only event unfolding this year. Every day is an opportunity for elected officials to demonstrate the leadership we need. Don’t tell me what you are going to do, show me what you are doing.

What We Are Reading

• The climate disaster is here

  This explainer piece and data visualization released last week by The Guardian really hit us at the core. Including background context, clear explanations, interactive data displays, this piece is one of the most comprehensive yet concise explorations of what our future will look like across various climate modeling scenarios. No science degree required--this piece makes it clear why so many have stopped talking about climate change and instead are now talking about the climate crisis.

• What is COP26? Here’s how global climate negotiations work and what’s expected from the Glasgow summit

  If the climate crisis scares you even half as much as it does us, maybe we can take heart that the United Nations Climate Change COP26 is only days away. The gathering of global leaders is framed as the last opportunity to avert the worst of the worst of the climate crisis. We’ve all been hearing more and more about COP26, but have you ever wondered exactly what happens at a COP and what we can expect from this upcoming one? This piece is a most excellent place to start.

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Welcome to the Being Intentional newsletter. Today we're going to talk about a little bit about Corporate Social Responsibility, or, more accurately, Corporate Social Responsibility Reports--Reports that are written by companies to detail all the good things they are doing on various sustainability issues. 

These days most public companies publish a CSR report, which can typically be found on a company's website under a "sustainability" section and it's usually available in both online formats as well as a PDF download. 

Have you ever read a CSR report? If you said no, you're not alone. In fact, no one would fault you if you didn't even know one existed. Most employees don't even know their company publishes a CSR report, let alone what goes into one! So why do companies bother publishing CSR reports if no one reads them? Well, almost no one, that is. Rating Agencies read them, and that's becoming a very important audience.

Along with quarterly financial reports, CSR reports are used by the rating agencies to help develop Environment, Social, and Governance (ESG) scores and these ESG scores filter into capital market allocations and strategies. What goes into a CSR report can have a very big impact on how a company gets rated, which, in turn, influences things like which fund the company's stock gets included in, which influences where your 401K investments go (for instance). It's now probably a bit easier to see the importance of publishing CSR reports.

CSR reports outline a company’s overall sustainability program and provide an opportunity to glimpse into what a company considers important to them--what’s “material” to them. Corporate sustainability programs are built on “materiality assessments”, which are typically stakeholder surveys conducted once every one or two years or so to try and determine what’s most important to a company. These static assessments then direct the focus for the following year and those issues show up in the CSR report. Unfortunately what most CSR reports fail to capture is you--the customer. Yearly materiality assessments rarely capture what’s important to a company’s consumers. They focus on employees, board members, and vendors, but almost never on customers. 

Sustainability is arguably the most important metric of our time and these CSR reports provide a lens into how companies are preparing for, and delivering on, strategies to enhance their sustainability. Although often flying under the radar, CSR reports are becoming increasingly important in terms of corporate strategy, employee retention, and capital market allocations, yet these reports often overlook the single most important stakeholder any company can have: the customers. This is not only a disservice to the companies but also to all of us as customers and as community stakeholders in the future of our planet. Motive is working to right this balance--thank you for working with us.

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Halloween is fast approaching and that means the clock is ticking on preparing for trick or treaters. Consider stockpiling treats from Frito-Lay/Cheetos (RS: +29, ↑91%), Pringles (RS: +21, ↑77%), or Hershey’s (RS: +20, ↑76%) instead of Nestle (RS: +15, ↑66%), Mondelez (RS: +14, ↑63%), Russell Stover (RS: +4, ↓52%), or Hostess (RS: -39, lower than ↓96%).

Speaking of CSR reports, take a quick look at those from  (Frito Lays, Hershey, Nestle) to get a handle on just what we are dealing with.

Trends in user searches at AskMotive.com are becoming more apparent, and one, in particular, is quite interesting. Searches are demonstrating a clustered distribution over time. Rather than being spread out relatively evenly across days and time, or in a repeating cycle of observable activity across weeks, we are seeing search activity spiking at seemingly random times.

This suggests users are turning to Motive as a result of an event that sparks an interest in a brand rather than during the actual purchasing activity. As an example of this, I am more likely to search for Adidas when the brand has been highlighted in the news or I have been exposed to some impactful marketing campaign than I am when I am actually seeking to buy an Adidas product. It seems we form our understandings of, and likely affiliations with, brands over time, and perhaps more deliberately, than we do though actual purchases. Buying is part of shopping, but not all shopping results in buying.

From our blog:

• Why Do You ESG?

  A new report circulating through the financial press highlights just how empty so many of the green promises of ESG and Sustainability funds truly are. Before you can make sense of what these funds are selling though, you need to come to terms with what you want from ESG. ESG is a universe of information to help guide decisions and lead to outcomes. The appropriateness of these decisions and outcomes depends on the motivation and anticipation you, as the protagonist, have in making them. Read more…

• ESG is Data, Not Impact

  Following the themes introduced in the last blog, we reiterate that ESG is data and not impact. Far too often ESG is being used--even by storied business management consultancies--as a synonym for impact of sustainability, and this is misleading. ESG is remarkably powerful data, but it can only accomplish what it is we want it to accomplish when we apply it within an appropriate framework...and we each need to identify for ourselves what ‘appropriate’ is. Read more…

This past week brought about a milestone in US Federal Government climate action. Twenty-three federal agencies and departments released their Agency Climate Adaptation and Resiliency plans for public comments pursuant to President Biden’s Executive Order on Tackling the Climate Crisis at Home and Abroad.

There’s a lot to read here, and we are making our way through every plan. If you can find the time it is an interesting adventure as each plan is truly contextualized to each respective agency’s focus. A great step in understanding how climate change touches everything.

Link here

All plans are available from the Office of the Federal Chief Sustainability Officer. (In case you missed it earlier, the USA now has a federal Chief Sustainability Officer as well as dedicated Agency Chief Sustainability Officers in all agencies and departments...sustainability is becoming systemic!)

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Welcome to the Being Intentional newsletter. We’re grateful for your support and hope you enjoy this latest edition. Let’s get into it, shall we?

Science and reality appeared to notch wins during last week’s UN General Assembly.

In a rather stunning turn of events, it was UK Prime Minister Boris Johnson that passionately laid out a case for common sense, calling on the world to grow up and deal with climate change. Cheers if you had that on your 2021 bingo card. In his address to the UN Johnson had this to say:

"We believe that someone else will clear up the mess because that is what someone else has always done. We trash our habitats, again and again, with the inductive reasoning that we've gotten away with it so far, and therefore, we'll get away with it again. My friends, the adolescence of humanity is coming to an end and must come to an end."

The UN gathering also saw U.S. President Biden make his second pledge of financial aid aimed at helping developing nations deal with the effects of climate change and to reduce their dependence on fossil fuels. In his announcement, the President noted that this would bring the U.S. commitment to a total annual outlay of about $11 billion by 2024. Additionally, President Biden announced the new President’s Council of Advisors on Science and Technology (PCAST) with a focus on Climate Change.

Confronting reality: ✅
Focusing on science: ✅

Big stages with larger audiences are catnip to elected officials so it’s no surprise that sustainability themes are front and center in New York. While we may not have expected Boris Johnson to be the bearer of cold water, we certainly expected climate change to garner significant airtime.

However, we should also expect follow-through on these declarations. As this article makes clear, “highly-polluting business in industries such as oil, aviation, and cement have generally adopted the “easy” target of net-zero by 2050 preferred by many politicians.” This is considered the “easy” option because for many corporations (and governments) the problem becomes the “next management’s problem”. In addition to the “easy option,” as we discuss later in the newsletter, of the 4,215 companies hailing from the G20 countries which have announced climate action plans and carbon targets, only 20% are science-based.

Sometimes the problem doesn’t wait until the next management or government. Case-in-point: even as Boris Johnson was sounding the reality alarm on climate change his government is currently dealing with the West Cumbria coal mine which proposes to extract ~ 2.7m tons of metallurgical coal.

All of this is to say, applaud when people step up to SAY the right thing but support those that DO the right thing. The best part is that we don’t have to guess what people are doing; we all have the data to show when companies are doing the right thing versus when they are simply saying the right thing. We have never lived in a time when it’s been so easy to hold those in power accountable to what they say!

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Fall is upon us and it is now sweater weather--at least that is what Instagram is telling us and, as we all know, influencers know best. We aren’t going to tell you which sweaters to wear as there are simply too many variables in personal style and preference, but we can tell you what may be best in terms of cleaning your sweaters.

When running yet another load of laundry, consider adding a dose of Arm & Hammer (RS: 44, ↑99%), Purex (aka Persil) (RS: 33, ↑95%), or Woolite (RS: 31, ↑93%) detergent instead of Tide (aka Gain) (RS: 15, ↑65%), Kirkland (RS: 5, ↑50%), or Great Value (RS: -1, ↓58%). They may all clean your clothes, but they are not all made clean.

(* RS= RealScore value, ↑↓=percentile raking)

There is power in marketing. What was building up to be a typical reporting period for Motive user activity was completely thrown for a loop by the Apple PR event on September 15th. 

This singular event skewed consumer interest and curiosity and pushed Apple into the most searched brand on AskMotive.com. In fact, Apple grew to represent over 42% of all user searches. For each reporting period, we typically see a relatively small sub-sample of brands capture a critical threshold of interest, but never before have we seen one distinct brand capture such a prominent share on its own.

Clearly, people were intrigued to see what new gadgets Apple was bringing to market. Even better, many people were also interested in understanding the impacts of Apple in bringing these products to market.

From our Blog:

• ESG May Not Mean What You Think It Does

  The demand for ESG products, from data to analytics to managed investment products, is absolutely booming. And of course, so is the number of products and services purposefully being mislabeled as being ESG--grifters, cans, and predatory service providers will never miss an opportunity to make a buck. Remember, ESG itself is not a product, a process, or a promise--it is data. Any offer that doesn’t make this distinction is likely more marketing than it is substance.

• It’s About Outcomes Not Frameworks

  With growing interest in ESG and corporate sustainability comes a seemingly ever-growing wave of third-party, industry, and NGO associations, coalitions, and frameworks promising to help coordinate corporate efforts and initiatives. Companies should be cautious in their participation with such frameworks and coalitions as not all are created equal. Consumers and stakeholders expect measurable outcomes and impacts, and participation in a coalition or shared initiatives are not actually an outcome--participation must be able to lead to something.

From our YouTube Channel:

Companies just getting started with ESG reporting may have lots to consider, so why not take a page from some of the best practices as demonstrated by leaders in this space?

• G20 companies neglecting science when setting climate targets

  The 26th UN Climate Change Conference (COP26) is meeting in Glasgow, UK, in early November to seek common ground in advancing climate action ambitions beyond the 2015 Paris Agreement. This is a huge event in the climate space and so of course national governments and companies alike are not going to be missing out on such a great PR opportunity. Leading into November, ever more ambitious climate action plans and promises are being unveiled, marketed, and promoted. Unfortunately, of the 4,215 companies hailing from the G20 countries which have announced climate action plans and carbon targets, only 20% are science-based and in line with meeting the (soon to be historical) goals of the 2015 Paris Agreement. COP26 is billed as a pivotal moment for our world’s future, but we all need to make sure it delivers more than just another photo op.

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We frequently get asked how we score brands; where do the numbers come from? What is the methodology we use? These are great questions and the answer gets at the heart of what we do. The short answer is that we use ESG data to rate companies. While many people are familiar with ESG, many more are not. If you're not familiar, allow us to provide a quick overview. ESG stands for Environmental, Social, and Governance and it's a way to quantify a company's position on issues that fall into the realms of environmental, social, or governance performance. ESG has traditionally been viewed through a financial lens and it allowed investors to qualify a company's risks e.g. is this company likely to be involved in a scandal, etc. ESG data is now commonly used to create financial products for retail investors (think "Green Funds"). There are now over 3,500 unique funds that are based on ESG data, which means that billions of dollars are flowing into the ESG universe.

Where does ESG come from, though? Good question! ESG data is derived by analyzing as much information as possible on a company. Some of this information comes from financial statements which provide insight into things like executive compensation, or the existence of independent board members, or oversight committees. Some of this information comes from public disclosure, such as the resources a company consumes, or a company's hiring practices. Some of this data is simply derived from the type of industry in which a company operates. As you can see there are many inputs into ESG data, and it's important to keep in mind that ESG reporting is unregulated and does not conform to a single standard. If you'd like to open up Pandora's box just ask anyone involved with ESG data their opinion on standards and frameworks. Just joking. Don't do that or will be forced to write another blog post about it. Like this one, or this one.

Who collects all this data? And, if there isn't a single standard for reporting couldn't there be problems? More great questions! These inputs are collected by firms called reporting agencies. ESG reporting agencies are similar to consumer credit agencies; they collect raw data and then apply their own weighting to the data in order to produce a score. And, just like consumer credit agencies, the data isn't perfect. The reporting agencies can overlook things, or companies can intentionally or unintentionally mislead reporting agencies, or the weightings that the reporting agencies give to the raw data can improperly skew the scores. There are a lot of variables at work, and with variables come increased chances for error.

But--and this is important--when ESG data is aggregated from multiple reporting agencies, and when ESG data is viewed as a relative data point, we are able to paint an accurate picture of a company. Perfect, no. Accurate, yes. Sure, there may be (certainly are) larger margins of error than we'd all like, but it allows us to track the progress of a company and compare two companies to see if one is better than another in a number of key issues.

This is definitely more than you wanted to know about ESG, but the ESG wave is turning into a tsunami and at least now you can hold your own at cocktail parties (do people even go to cocktail parties anymore?).

As always, thank you for reading and supporting Motive. You're the best and we are deeply grateful. 

Taylor & Kai

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Every little change helps...and there are few changes smaller than toothpaste. Browse any pharmacy shelf or online listing and we find dozens of options varying by flavor, promised outcomes, or the availability of sparkles.

But for all of this variety, the shelf is dominated by five principal brands: Sensodyne, Crest, Colgate, Arm & Hammer, and Tom’s of Maine. And these five brands are actually misleading because Tom’s of Maine is owned by Colgate--so really only four brands to choose from. So, which one is best for people and the planet.

Good news: at least all four brands have positive RealScores! Even so, however, Arm & Hammer and Colgate really set themselves apart and are among the highest-rated brands across any and all sectors!

Arm & Hammer(RS: +41, ↑ 99%)

Colgate (RS: +39, ↑ 99%)

Crest (RS: +15, ↑ 65%)

Sensodyne (RS: +13, ↑ 63%)

For the first time ever, no individual industry sectors were prominent at a critical interest threshold. All user interest was spread to brands from a wide distribution of industry sectors with no sector being statistically more prominent than any other sector. 

This is very interesting and exciting!

It’s too early to draw any meaningful conclusions, but it would seem Motive users are turning to us for information across all purchases. In one sense, it would mean Motive users are not driven by a specific interest in sustainable fashion or ethical foods, as examples, but rather by an interest in sustainable EVERYTHING!

We have been careful in our development to appeal to as many intentional shoppers as possible and this is a sign that our efforts are paying off...and a sign that we will be keeping an eye on.

GSK Adds Carbon Neutral Toothbrush to its Lineup of Sustainable Products

Carbon Neutral Toothbrush? GlaxoSmithKline (GSK), makers of Sensodyne toothpaste (see above), have a media push on right now touting the virtues of the first-ever carbon neutral toothbrush. This is less interesting as a toothbrush than it is as a study in how marketing departments view the opportunities of “carbon neutrality”

From our Blog:

• Be Critical: Climate change denialism and alarmism both contort the science to their own agendas and are both prevalent--it helps to have a foundation to help us all make sense of what we are hearing.

• Titans of (Sustainable) Capitalism: If it wasn’t clear before, it should be now: Sustainability is profitable. The ‘titans of capitalism’, the self-styled experts in profit, have now recognized this.

From our YouTube Channel:

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“How wonderful it is that nobody need wait a single moment before starting to improve the world.”

Anne Frank wrote this in Anne Frank's Tales from the Secret Annex. It has stuck with me ever since I read it in school many (many) years ago. It is, for me, the perfect definition of optimism. When things aren't going well…when the news is bad…when things feel overwhelming…I think about what Anne Frank wrote--and the perspective and conditions from which she wrote it--and it makes me happy. We all have an amazing opportunity to start making the world a better place.

Between record-setting wildfires in California, once-in-thirty-year hurricanes slamming the East Coast, and constant anxiety from an unrelenting pandemic, we can all be forgiven for feeling overwhelmed and, at times, feeling helpless. No one is alone with these feelings--it's hard out there. But, there is good out there too, and it's more important than ever to celebrate and build on the good things so we don't become consumed by the bad things.

If you're at all familiar with Motive, you know that our focus is on helping companies become better because we believe that how companies operate has an outsized impact on the world in which we live. Just as individuals have an amazing opportunity to start making the world a better place, so do companies. Our ask to you, as you read this newsletter or buy the products that fill your shelves, is to think about the companies you support with your purchases. What are you telling those companies with your purchase? In that instant, that single moment, you are seizing your opportunity to make the world a better place. 

We are grateful for your support and hope that this newsletter is both educational and fun for you to read.

Taylor & Kai

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It’s official: Calendars don’t matter anymore! In a bid to outdo each other, both Dunkin’ and Starbucks released their pumpkin spice lattes this week--along with every other imaginable application of this flavoring. The beverage once associated with the onset of Autumn is now at your local coffee chain as of August 22nd!

Many coffee chains may be similar in their flavor offerings, especially during PSL season, but not all are similar in their responsibility toward their impacts on people and the planet. For more localized chains, check out AskMotive.com, but for larger regional/national chains, consider:

😀 Peet’s Coffee, Gloria Jean’s, or Caribou Coffee (all owned by Keurig Dr. Pepper RS: +26, ↑ 85%) or Starbucks and its subsidiary of Seattle’s Best Coffee (both with RS: +19, ↑ 73%)

instead of…

🙁 Dunkin’ (RS-4. ↓ 61%), Costa Coffee (RS: +8, ↑ 53%), or McCafe of McDonald's (RS: -1, ↑ 57%).

Motive is built on the fact that we are undergoing a seismic shift in consumer behavior. People want their spending to align with their values. People want brands to take meaningful action and clear responsibility for their impacts on the issues they care about. This shift is powerful…and global.

We are already seeing the global nature of this transition within the Motive Movement. Over the summer months, people from 42 different countries--and from across every continent of the world--have turned to AskMotive.com to learn more about the impacts of brands. Many of the countries you would expect to see audience members from are present, but not always in the order, we would expect.

Intentional shoppers from the USA lead the charge, followed by India, Canada, China, and UK to round out the top-five.

From our Blog:

What Are We Even Talking About? : Sustainability is everywhere today. Everyone is talking about it. But the problem is that all this talk is meaningless if we don’t actually define what we are talking about. It’s been over 34 years since the popular concept of sustainable development emerged, but here we are today still working with vague and implicit understandings of what sustainability even means. To move forward, we need to define what it is we are moving toward. So, what does sustainability mean to you?

Be Loyal to Better: When we find a brand we like we often find ourselves becoming ever more loyal to it. This is no accident--marketing is geared toward gaining our loyalty. But by being loyal to a brand we remove the pressure we have for them to become better--we reduce our own power. Brands are always changing and we have a strong hand in directing this change. So don’t be loyal to a brand, be loyal to brands being better.

From our YouTube Channel:

Sometimes being intentional in our shopping can be a little frustrating, but it is worth the effort--brands are listening, change is happening!

Foundations for a Science-Based Net-Zero Target Setting in The Corporate Sector.

The world needs to reach net-zero carbon emissions by mid-century if we are to mitigate some of the worst consequences of climate change imaginable. This has been known for some time, and recently brought back to the fore by the alarming IPCC report discussed in our last newsletter. The concept of net-zero has grown rapidly in public interest with many companies jumping on the bandwagon touting their commitments and plans--unfortunately, most corporate approaches to net-zero are being approached inconsistently and with little understanding of the dynamics involved. The Science-Based Targets Initiative--what we view as the gold standard in carbon emissions target-setting--is introducing a conceptual foundation for science-based net-zero target setting. This report is just the beginning, and if you are interested in keeping up to speed with companies’ net-zero trajectories, it is well worth the read.

That’s it for this edition. We hope you found it helpful and enjoyable. If you did, we’d love it if you’d share the Being Intentional newsletter with your friends. Thank you!

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The Sixth Assessment Report does not provide any new scientific evidence in itself, but rather is a synthesis and discussion of leading research from around the world--it is the best insight we all have into the state of the science of climate change. And the insight this recent report provides is alarming. We effectively have a very narrow window of opportunity to make the meaningful choices we need to make right now in order to prevent decades of some of the worst climate consequences unimaginable.

The full report and supporting annexes and appendices run to well over 3,000 pages (download here) but the summary for policymakers--at just under 40 pages--provides a concise overview as a more manageable undertaking. Leading the science side of things at Motive, Taylor is trudging through the full report, but it looks like Kai will be let off the hook and get away with reading the summary (so typical of him!)

What is most interesting is how this Sixth Assessment Report has changed over time since the release of the IPCC First Assessment Report in 1990. For decades, the scientific community--pushed by policymakers--felt compelled to cushion our understanding of climate change in qualifiers. In earlier reports, the narrative held that human activity may contribute to climate change and that finding solutions would require global cooperation. This newest report is leaving no room for qualifiers or equivocation. Human activity is clearly causing climate change above and beyond that which is naturally occurring and solutions require immediate, explicit, and coordinated global action.

The IPCC Sixth Assessment Report is clear--climate change is real, we are accelerating it, the consequences are life-threatening, and it is all happening faster than we expected. Businesses and policymakers can no longer cite uncertainty or compromise as reasons to not engage in meaningful climate action. Of all the cutting-edge research cited in the report, its true value comes from its overarching narrative: There is no room for doubt, no room for error, no patience for denial, and no case for business-as-usual.

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Keeping with the themes of the IPCC report, consider switching away from some of the worst climate performers among popularly recognized brands such as Lyft (RS:-33, ↓ 91%, 🌏 -50), Avia, And1, DVS Shoes--all owned by Sequential Brands (RS:-25, ↓ 84%, 🌏 -50), Breville (RS:-11, ↓68%, 🌏 -49), or Fitbit (RS:-29, ↓88%, 🌏 -48) and instead consider how much better other popularly recognized brands are performing, such as Qualcomm (RS:+42, ↑100%, 🌏 +76), Herman Miller (RS:+15, ↑ 64%, 🌏 +62), Ben & Jerry’s (RS:+25, rank: 83%, 🌏 +53), or Delta Airlines (RS:+18, ↑ 70%, 🌏 +58).

We are facing a climate crisis, and favoring the brands that are taking meaningful action is a simple yet powerful step we can all take...and clearly some brands take this situation far more seriously than others.

🌏 = Climate Action sub-score

This latest reporting period continued a trend that we have been monitoring for quite some time now. Search activity on AskMotive.com is overwhelmingly concentrated toward the flagship brands of the modern economy--that is, the largest and most recognizable brands around the world. What is most interesting, however, is that a search for McDonald’s is more likely to be followed up by a direct comparison search to Nike (as but an example) than it is by a search for any other smaller restaurant brand. Or a search for Google followed by a search for Patagonia, as another example.

This trend, and its continued strength in particular, raises a lot of questions for us. We will investigate them all, but most notably we are most interested in learning:

1. We see only minimal interest, and often none at all, in exploring the impacts of smaller and newer brands that advertise themselves as being particularly ethical or eco-conscious. Our own social media feeds are flooded with advertisements for waterless soaps, tablet toothpaste, plastic-free kitchenware, and so on all promising to be a low-impact alternative to the established brands, yet we are not seeing these brands reflected in the AskMotive.com searches. Is it that people are more willing to accept the eco-claims of smaller and newer brands without question? Or is it rather that these brands are spending a lot on advertisements that are not actually converting to likely sales and so few people are actually investigating the claims? Or is it something else altogether?

2. Is the process of finding alternatives to the brands we know actually a longer-term process? Are we exploring the impacts of all the flagship brands that we have grown comfortable with and then taking time to reflect on how this makes us feel and if we really do want to find alternatives? Does learning more about the flagship brands lead to a moment of introspection questioning how much we are willing to align our spending with our values? Is the process of becoming an intentional shopper one that is played out over the course of months instead of moments?

If you see yourself in any of these questions or have any thoughts about these, please do connect with us. The psychology of intentional shopping is an amazing topic to explore and it is the most fun to explore it collaboratively.

From our Blog:

Back-to-School Shopping with Impact - This blog was born from our last newsletter. The topic of back-to-school shopping was so timely that we decided to expand upon what we introduced in the newsletter and share it more broadly.

Don't Tear it Down to Make it Better - Change can be difficult, in fact, it can often feel outright impossible. But change doesn’t need to be an all-or-nothing pursuit. Both systemic and incremental changes will help make the world better and we can each find the level of change that we are comfortable with. Not everything needs to be torn down to be made better.

From our Youtube Channel:

We know that studies can be dry reads, especially a study titled “Global Trends in Investor Relations” but this particular study provided some fascinating insight that we thought was worth sharing. As with most of the things we read at Motive, this, too, concerns the ever-expanding ESG market. This study focuses on the effects of ESG on the Investor Relations landscape. How companies communicate and manage their investor community plays a significant role in the life of any public company. If you’d experienced working for a public company you will have undoubtedly encountered the IR group, especially during quarterly financial reporting ramps up.

Investor Relations is yet another corporate group that is feeling the seismic shift brought about by ESG. As this study so clearly illustrates IR teams are struggling to keep pace with their investor community. From the report, “investors are not only pushing ESG onto the standing agenda of meetings with issuers, they are bringing their specialists to the table when issuers are not.” In fact, the disparity is striking: 83% of investors are bringing ESG specialists to the investor calls, whereas only 23% of issuers are doing so. This unbalanced scenario is not sustainable for companies, and it predicts a future of greater and greater demand for companies to have formal EG programs in place that are able to provide investors with the data they are eagerly expecting.

As always, we are grateful to you, the readers of this newsletter, for all your support and encouragement. If there are areas you’d like to see covered please let us know in the comments below.

Taylor & Kai

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If you’re one of the millions stocking up on back-to-school items think about shopping at Marshalls (RS: 22 | ↑ 78%), Target (RS: 15 | ↑ 65%), Kohl’s (RS: 12 | ↑ 60%) INSTEAD OF JC Penny’s (RS: -16 | ↓ 76%), Walmart (RS: -1 | ↓ 58%), or Costco(RS: 5 | — 50%).

• Note: We’ve begun adding percentiles to the brand RealScore ticker so it’s easier to understand where a brand ranks in comparison to all other brands e.g. “↑ 65%” = “Better than 65% of all brands.”

Throughout this latest reporting period, people turned to Motive to learn more about the impacts of over 130 distinct brands operating across 37 different industry sectors. Of this diverse sample, eight brands stand out for having surpassed the critical interest threshold. 

What is most interesting in this is that these leading brands mostly all hail from different industry sectors (with the exception of Porsche (RS: -7 | ↓ 74%) and Toyota (RS: 18 | ↑ 71%) which both operate in the Motor Vehicles sector). It would seem the interests of intentional shoppers are not limited to one, or only a few, industry sectors but rather are spread across all shopping behavior.

It wasn’t so long ago that brands assumed shoppers only cared to align their purchases with their values when buying food, clothing, and cosmetics. This is definitely not true now (if it was even ever true then!). Certain industries do continue to garner more interest than others, but it is becoming clearer that intentional consumers are demanding more transparency and more alignment from nearly all industry sectors...and this is what we are here for!

Have you ever seen this logo?

Next time you’re fish at the grocery store take a look at the box, or, better yet, look in your freezer and there’s a good chance you’ll see this logo. This is the logo for the Marine Stewardship Council.

The MSC is a certifying body that, in their own words, “encourages responsible fishing management and sustainable fishing practices to protect the future of fishing communities, preserve ocean ecosystems, and ensure seafood is available to everyone, always.”

What does it take to be certified by the MSC? From MSC’s website certification is achieved based on 3 areas of concern.

1. Sustainable fish stocks. There are enough fish left in the sea to reproduce so fishing can continue indefinitely.

2. Minimal environmental impact. Fishing operations must be carefully managed to maintain the structure, productivity, function, and diversity of the marine ecosystem.

3. Effective management. The fishery must comply with relevant laws and have a management system that allows it to respond quickly to changes in the status quo.

Most importantly, MSC certification requires third-party verification. At Motive, we view third-party verification as a requirement for a certification to be considered a positive indicator for a brand. Self-reporting, self-governed certifications are effectively meaningless.

MSC also requires a Chain of Custody for businesses using the MSC logo. This means that ALL products can be audited back to their origin. Chain of Custody is an important topic and we’ll talk more about Chain of Custody in future blog posts and newsletters.

From our blog:

• Experts in Overthinking — Do you overthink your purchasing decisions? We certainly do! But overthinking becomes frustrating when you’re faced with nothing but greenwashed marketing campaigns. Learn how we cut through greenwashing to find the truth about brands.

• Being Intentional Pays Off — It’s easy (too easy) to think that our choices have no impact. That these seemingly inconsequential purchases we make are nothing but a drop in an ocean. But, they MAKE A DIFFERENCE. This post illustrates the impact that we’re all making when we make intentional purchases.

From our Youtube Channel:

• We are working to include certifications (like the MSC certification) in search results. This includes being able to search by brands based on their certification.

• Soon we’ll be introducing preference customization. This means being able to create an account with Motive and being able to set scoring “weights” based on the issues that matter to you. This is a large update so we’ll be working on it for some time.

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We’d like to start off this newsletter with something interesting that happened this week in the ESG and Sustainability world. There are many interesting things happening in this space right now but this piece of news stood out to us. 

Neiman Marcus announced that they were going fur-free in a June 30th, 2021 press release titled, “Neiman Marcus Group Goes Fur-Free as Part of Its Forthcoming ESG Strategy.  This is great news for people who care about animal welfare issues, but this one announcement, and its title, manages to encapsulate the powerful forces at work today in the Sustainability and ESG world and it’s worth taking a minute to break it apart.

1. It’s clear that this decision was made because consumer demand for fur products has plummeted almost 300% in the past 10 years in the United States. The Dallas-based retailer no longer sees fur sales as a fruitful source of income so it is shuttering the practice. People have voted with their wallets and fur sales are out at Neiman Marcus!

2. Neiman Marcus released the news within a broader announcement of their “forthcoming ESG strategy.” In the release, Neiman Marcus states, “Neiman Marcus recently created a team to identify, improve, and disclose performance on material ESG issues across its business, including topics like animal welfare.” This is part of a much larger macro trend of companies investing in ESG and Sustainability programs and reporting. In this particular case, Neiman Marcus is also using their ESG strategy as a marketing strategy which is clever and will increasingly become the norm. 

3. But wait, Neiman Marcus isn’t public. Why are they investing in ESG and sustainability? That’s right, Neiman Marcus is owned in equal parts by Ares Management (RS: -37) and the Canada Pension Plan Investment Board, and therefore not public (Motive does not have a RealScore for Neiman Marcus because of this). However, these two owners are public and so accountability is being pushed down the value chain. If you dig a little deeper you’ll see in the CPP Board’s “Report on Sustainability Investing - 2020” they have introduced a new section specifically detailing their expectations for their portfolio companies regarding ESG.  

Shifting consumer behavior within the retail sector and shifting investor sentiment have motivated Neiman Marcus to take action. This is a cycle that’s being repeated across the industry so expect to hear a lot more stories just like this. Also, expect to see ESG and Sustainability increasingly used as a marketing tool—but trust that Motive will always be there to cut the spin from the truth. This is the new world that brands find themselves in and we think it will only help make the world a better place. 

Exxon has been in the news this week for all the wrong reasons. In a secretly recorded video, a lobbyist for the company spoke candidly about Exxon’s approach to climate change, which came as no surprise to many. However, since gas-powered vehicles still dominate U.S. roads (89%), and with most July 4th travel plans already underway, we wanted to see how the oil & gas companies actually faired. Are some gas companies better than others? Is it a lost cause or can you vote with your wallet at the pump? It turns out the answers are yes, and yes.

In this article, Financial Services firm MorningStar details some of the gas companies at the top of the pack. As the article points out a vast majority of the emissions from integrated oil come from scope 3 emissions (upstream and downstream emissions that are difficult for a company to control) but the firms seem to understand the business value of trying to address scope 3 emissions.

According to our data, the industry as a whole has an average RealScore of 11.18 with Amplify Energy (RS: -43) Falcon Minerals (RS: -43) tied for the worst of the bunch putting both in the bottom 99th percentile. Conversely, Portugal-based Galp Energia comes in at the top with a RealScore of 39 (RS: 39) putting it in the top 99th percentile. As we said, it’s a wide range.

Our RealScore values for the top integrated oil firms range drastically from extremely poor to good (top 10 sorted below from high to low)

1. Petro-Canada (RS: 20)

2. Suncor (RS: 20)

3. Repsol (RS: 16)

4. BP (RS: 9)

5. Amoco (RS: 9)

6. Castrol (RS: 9)

7. Exxonmobil (RS: 8)

8. Texaco (RS: 3)

9. Chevron (RS: 3)

10. Shell (RS: 3)

When we take a look at the numbers by issues you can see that almost all of them have low Climate Action scores. This isn’t surprising…but it’s worth noting that even within this theme there are winners and losers. However, when we look at the other issues, such as Employment Standards and Human Rights, we see really wide swings showing that some of these companies are prioritizing these issues while others are dropping the ball. Dependent upon the issues you care about, there may very well be a ‘better’ oil and gas company for you.

• These past 2 weeks have been spent addressing a number of behind-the-scenes issues. While these things aren’t nearly as exciting as customer-facing updates they lay the groundwork for new features and products that are in the works, such as:

  • Our first crack at personalization. Meaning, the ability to have the scores tailored to the things you care about.

  • Category search. Currently, we only support brand name search. In the very near term, we will be enabling the ability to search by category.

  • Additional result page elements include contextual information about brands, including yearly revenue, and key employment figures.

As always we’d love your feedback about things you’d like to see on www.askmotive.com. Leave us a note in the feedback form found on any page at askmotive.com or DM us on Twitter @askmotive.com.

• Our Blog:

  • We Are Not Powerless (click here to read )

    • It’s easy to feel powerless when you think of your individual actions versus large companies, or bureaucratic government agencies. What power do you really have, anyway?  Taylor has a great line that is worth repeating, “We forget that we are the companies and the governments. It is all just us, we are everything.”

  • When 'Better' is Better than 'Best' (click here to read )

    • Strive to make incremental progress. Don’t stress about not being perfect. Too often we apply “purity tests” to ourselves and then get frustrated when we fail to meet our own false expectations. Better is progress, and that’s what we’re all after.

• Our YouTube:

  • Green Mutual Funds?

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Last week we included a very brief survey at the end. Thank you to all that took the survey! We asked if you looked for certifications when you shop and if Tide’s new marketing campaign highlighting sustainability would influence your shopping decision.

77% of you said that you do look for certifications when you shop!

Tide was tied (get it?) 50-50% with those saying it would influence your decision and those saying it wouldn’t.

We’ve included another survey at the bottom. We’d love to hear more about what you think so be sure to check it out!

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Movies are back, just in time for summer. For this edition of the newsletter, we took a look at the top movie theatre chains in the United States and the top motion picture distributors. An interesting thing jumps out when you look at the top movie theatre chains: None of the top four companies have a RealScore above ZERO!

If you’re headed out to the big screen, choose Cineplex (RS: -16) and Regal Entertainment (RS: -18) above Cinemark (RS: -23) and AMC Theatres (-32).

Thankfully, the production companies scored much higher.

Sony’s Columbia Pictures (RS: +28) and AT&T’s Warner Bros. (RS: +26) easily outperform Disney Studios (RS: +8) and Comcast’s Universal Pictures (RS: +2)

• Brand searches were very concentrated over this latest reporting period with all activity focusing in on 60 distinct brands—this is the most concentrated search activity we have seen to date.

• …but the tight focus didn’t end there, within these 60 distinct brands, four stood out in particular for attracting so much attention. Papyrus-Recycled Greetings (is there a holiday of some sort coming up? Asking for a couple of fathers…), Nike (always among the searches, but much more so this past week), Coca-Cola, and Guinness were so popular that no other brand could break across the critical interest threshold to join them as leading searches.

• New in our analytics…Motive users are more likely to click on a brand that has been recently searched by a fellow Motive user than they are to launch a fresh search of their own. The real question now is: Are people coming to Motive and clicking a recently-searched link as a shortcut to a search they were intending to carry out, or are they temporarily getting sidetracked from their intended search as they become intrigued by what other people have searched? The dynamics in these user flows are really interesting and we will be following up!

We have been publicly measuring the impacts of brands on the issues that matter for six months now and it is amazing to see how quickly and significantly some brands’ RealScores can change in such a short period of time. If there was ever a doubt that brands need time to respond to consumer demands, this should put it to rest. Comparing the RealScores of 12,578 brands from January 2021 to now:

• 5,377 (42.7%) of brands have been assessed to have decreasing RealScores over this six-month period. Of these, 22.1% were assessed with decreases of 10% or less…meaning a full 77.8% saw their RealScores drop by more than 10%!

• On a slightly more positive note, 5,909 (47%) of brands have been assessed to have increasing RealScores over this six-month period. Of these, 17.8% were assessed with increases of 10% or less…meaning 82.2% saw their RealScores improve by more than 10%.

• 1,292 (10.3%) brands did not show any movement in their RealScores over this period.

• Across all brands, the average change (whether increasing or decreasing) was of 65%. Brands are clearly not static, and with this much movement, there is ample opportunity for Intentional Shoppers to leverage their spending power to help drive the change they want to see.

• …there’s a lot here to explore and we will be writing a more in-depth analysis soon…

Our Blog:

• ESG is Not Sustainability  (click here to read )

  • Environmental, Social, and Governance (ESG) data is growing at an astounding rate but it’s important to understand how that data is developed and interpreted and to remember that “ESG” does not equal sustainability.

• What’s Your Signal? (click here to read )

  • Intentional and informed consumers can change the world…but we need to know what we want to change it to. Every purchase we make sends a signal to all companies about what to make AND how to make—so what’s your signal?

Our YouTube:

• What does ‘better’ mean to you?

  ---

• Elevated Economics: How Conscious Consumers Will Fuel the Future of Business by Richard Steel. It’s hard to overstate how closely aligned the thesis of this book is with Motive’s mission. Each page feels like it’s been pulled from Motive’s fundraising deck, so if you’ve ever wondered why we started Motive just read this book and you’ll understand (or you can just ask us!)

Things Live this Week:

• New brand tiers: We have added a tiering system to the brands within the Motive RealScore database based on popular recognition. When you search for a brand, we return three additional reference brands to help contextualize the results—with this new tiering, the reference brands should be more appropriate.

• AskMotive.com: We have added a new location to the Motive digital real estate! Motive Search is moving to www.AskMotive.com. This address is more action-oriented and simplifies our social media and video marketing efforts. The user-facing Motive Search is migrating to this new address while we will be maintaining our former address for corporate development.

• Up-dated data: All scores in the Motive RealScore database have been updated as of June 8th, 2021 and over 600 new brands with full RealScore details have been added.

Things being worked on:

• Analytics: This doesn’t directly contribute to the customer experience but we have a growing body of data and need to continually improve our analytics so the insights we provide are accurate and meaningful. 

• New search types: Still working on presenting new ways to search for brands and products. This includes things like search by sector (e.g. Beverages), certifications, high scores/low scores, and more.  

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In this newsletter edition’s survey, we’re curious about how you shop. What’s important to you when you shop? You told us that certifications are important, but are there other things that help you decide which products to buy? Do you shop for yourself? Or do you shop for multiple people? Click the link below and let us know!

Take the quick survey here (2 minutes, max)

Thank you for being here with us. We appreciate your support as we build Motive. In this edition of the newsletter, we include a small, two-question poll at the bottom. This is an experiment so please take the poll and let us know what you think!

Share Being Intentional

Time for a Change 🛒

Since we’re on the subject of summer, let's take a look at some summer staples that most of us will likely purchase in the near future: Sunscreen and beer! 

If you’re out shopping for sunscreen reach for Neutrogena (RS: +38), Skinceuticals (RS: +33), and Kiehl's (RS: +33) instead of Hawaiian Tropic (RS: +14), or Banana Boat (RS: +14)

Looking for a cold beer on a hot day?  Well, Guinness (RS: +40) may not be the thirst-quencher you were thinking of but it has the highest score among its peers (and is delicious!). Heineken (RS: +33) and Coors Light (RS: +21) also perform well unlike Budweiser (RS: +17), Modelo (RS: +8), and Boston Beer (RS: -5).

Things We’re Seeing 👓

1. This recent reporting period brought in search activity covering 159 distinct brands across 38 distinct industry categories.

2. Interest in learning more about the impacts of particular brands is quite distributed across the economy. Of the 159 brands that were searched, only four achieved critical interest status--Compose[D], Shell, Nike, and Catena Media. We are seeing a lot of interest spread across a lot of brands.

3. Following, only three industry categories reported search volumes above what would normally be expected within this distribution of search activity, yet all but 18 also reported three or more searched brands. This pattern reflects a growing trend of comparison shopping on the Motive RealScore platform and is something we will be keeping an eye on as we continue to plan new improvements to our service.

Things We’re Interested in 🎓

• It is really interesting to see how Integrated Oil companies fared throughout this reporting period. History was made last week as Integrated Oil companies came under the heavy hand of the law and of shareholder power for how they have been preparing (or not) for a decarbonizing world. Developments at Shell, ExxonMobil, and Chevron stole the headlines and drew public attention and scrutiny to the entire sector.  We witnessed this attention on the Motive RealScore platform as these three companies were among seven Integrated Oil companies to be actively searched by users seeking to learn more about the brands’ impacts on the issues that matter.

• What was even more interesting, is that interest in learning about the impacts of Shell far exceeded that toward any of the other Integrated Oil companies. In fact interest in Shell was 18x that of ExxonMobil and 37x that of Chevron.

• Although all three of these companies experienced decisive and very public actions on their climate strategies, Shell was the only company to be held to account within the rule of law. ExxonMobil and Chevron were taken to task within the frameworks of their annual general meetings, but Shell was handed a legal verdict. That the company could be found guilty of misrepresentation and ordered, under the force of law, to reduce their carbon emissions by 2030 was simply not expected. This unprecedented development left many people wondering exactly what were Shell’s impacts and how they could be improved--and these people turned to Motive for answers.

Things We’re Saying 🎙

• It Could Have Been Just a Tag  (click here to read ) -- Are brands trying to offload their responsibilities onto customers? Taylor breaks down his experience while cloth shopping. 

• Intentional Shoppers Force Change at ExxonMobil (click here to read ) -- What has once been considered the intangibles of businesses are now the competitive differentiators of businesses. Sustainability is a cornerstone of profitability and what happened at ExxonMobil this past week is further proof of just that.

• What Are Parent Companies Trying to Hide? (video below)

Things We’re Reading 📖

• Elevated Economics: How Conscious Consumers Will Fuel the Future of Business by Richard Steel. It’s hard to overstate how closely aligned the thesis of this book is with Motive’s mission. Each page feels like it’s been pulled from Motive’s fundraising deck, so if you’ve ever wondered why we started Motive just read this book and you’ll understand (or you can just ask us!)

• The Ministry for the Future: A Novel by Kim Stanley Robinson. This book is being read as part of MyClimateJourney’s Book Club series and takes readers into a future trying to cope with the effects of realized climate change. While it’s science-fiction it feels all too real and not too futuristic.

Things We’re Doing 🏗️

Things Live this Week:

• New Single Search Result Design: We are constantly striving to make the results we present more actionable. All scores are now on the right-hand side of the page and company-related information is on the left. Additionally, we’ve updated colors to better reflect the scores. The Brand Realscore tile is now color-coded so you can quickly determine if this brand has a good score or not.

Things being worked on:

• Askmotive.com: We will be switching to askmotive.com very soon. This domain is a) easier to remember and b) more reflective of how people are using Motive. 

• Analytics: This doesn’t directly contribute to the customer experience but we have a growing body of data and need to continually improve our analytics so the insights we provide are accurate and meaningful. 

• New search types: Still working on presenting new ways to search for brands and products. This includes things like search by sector (e.g. Beverages) , certifications, high scores/low scores, and more. 

What do you think? 🤔

We’d love to hear what you think in this extremely short, two-question poll about current sustainability topics.

1. Do you look for certification logos when you're shopping online or in stores?

   • Yes (click to answer)

   • No (click to answer)

2. Tide detergent claims that their new product, Tide Coldwater Clean, is better for the environment. Does this claim make you more inclined to purchase the product?

   • Yes (click to answer)

   • No (click to answer)

   • Other (click to answer)