In McKinsey’s May 2007 Web Exclusive Investing in Sustainability: An interview with Al Gore and David Blood (of Generation Investment Management), we are introduced to an extended investment model that fully integrates sustainability into its core. But more than that, we are reminded of some basic truths by Blood & Gore that we should not forget.
- It is best practice to take a long-term approach to investing.
- The leading CEOs are the ones who explicitly recognize that sustainability factors drive business strategy.
- There are material sustainability challenges in all industries.
- You need to tackle the three or four long-term issues that will really affect corporate profitability.
- Focusing only on the quarter can blind you to the most important factors of all.
- I think that the board of directors has a growing responsibility to address these very topics.
- In addition to helping us assess the quality of a business model, a company’s response to the climate challenge can tell us an enormous amount about a management team.
- Your employees, your colleagues,
your board, your investors, your customers are all soon going to place a much higher value-and the markets will soon place a much higher value-on an assessment of how much you are a part of the solution to these issues.
And even though these bullet points don’t do justice to the in-depth discussion that was recorded in this four-plus page article, which pointed out that good sustainability practices and investments are the result of tackling the three or four long-term issues that will really affect corporate profitability, and not the 50 different tick-box sustainability criteria that might appear on someone’s list, they do serve to point out that sustainability is all about basics because sustainability is basic Fundamentally, businesses exist to make profit – but the only way to do that is to insure you stay in business. To do this, you will continue to need increasing raw-material supplies, manpower and brainpower, and customers to buy your product. Without the adoption of sustainability practices across the board, a corporation will not be able to insure that everything it needs tomorrow to sustain profitability will be available. Thus, sustainability should be a corporation’s first thought when developing its business plan, not its last.