Bobby Kennedy once said: “GDP measures everything, except those things worth living for.” While historically the return on investment was almost exclusively the aspect of company performance that mattered, we now see that investors are becoming increasingly interested in the social and environmental performance of companies as a way of assessing a company’s ability to deliver yield in the long-term. As our financial systems become increasingly correlated with the ability of companies to balance economic prosperity with social justice and environmental care, it is my vision that in fifty years this quote can hopefully be consigned to the past.
Marrying financial markets with sustainability
But marrying investors with sustainability is not easy. In my profile on this blog, I quoted W. Edwards Deming, who said: “If you can’t measure then you can’t manage. And if you can’t manage, you can’t change.” But right this quote is actually the tricky bit; it is another famous saying that ‘not everything that can be counted counts, and not everything that counts can be counted’.
Investors value measurable information. However in sustainability, information is not always so straight-forward. Sure we can set up databases to track the money we spent on cultural sponsorships, and count the number of children we put through school. We can sum our air emissions and calculate our water discharges. But what results from all of this? How do we know these numbers contribute to a more sustainable future? How do you quantify human rights?
We can quantify many things, but not everything. Therefore, investors who are interested in the sustainability performance on the assets, projects, or companies they invest in, must seek confidence in immeasurable sustainability impacts, in other ways. At DNV GL, we believe this can be achieved in several ways.
Firstly, extensive sustainability expertise should be applied to ensure technical rigour. Sustainability is DNV GL’s core competence and we have been working on making the world safer and more sustainable for the past 150 years. My colleagues around the globe do amazing things: from designing floating offshore wind-farms off the coast of Japan, to studying the impacts of small scale farming on child development in Malawi. Applying the communal knowledge of DNV GL to responsible investment adds tremendous value and quality to the work we do.
Secondly, sustainability information must be adaptable to each organisation, in line with business models, priorities and information systems. We see our clients as partners, we continuously work together. After all, we can have all the knowledge in the world on sustainability – only the organisations themselves have the insight in how this can be applied to their business. Cultural aspects, information systems, types and locations of operations, strategies – they all influence what information is most relevant. A renewable energy company operating in Belgium is not the same as an extractive company in Papua New-Guinea.
Thirdly, information must meet the needs of investors. This is often where standards and guidelines play a large role. They give a framework to hang things on, and provide structures that investors understand. Moreover, language must be simple and straight forward. It is sometimes a challenge to make all the work easy and quick to understand, but we see this as one of the most important steps indeed.
Responsible investing for a safe and sustainable future
The financial markets have incredible power; they can make or break companies, projects, the environment, and ultimately the lives of persons. If we succeed in our role of getting the right information to investors, I believe we are taking gigantic strides in fulfilling DNV GL’s vision: to have a global impact for a safe and sustainable future. It is very encouraging to me that investors are getting on board the ship that sails towards this vision. And when that happens, we then can confidently say that investors are the persons who are helping valuing things in different ways, and that their decisions are in line with those things worth living for.
For queries regarding DNG GL and responsible investment, including green bonds, please contact Youri Lie via Youri.Lie@dnvgl.com or +44 (0)79 1719 1559.