5-Star CSR Strategies in Wealth 2022

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Delivering sustainable solutions

Global economic conditions are harsh, with no respite in sight, as soaring costs and the erosion of living standards hurt the most vulnerable sectors. Socio-economic inequality has worsened in the last few years such that the more affluent were able to build up their savings while the majority became more heavily indebted.

Fault lines in access to healthcare and public services were painfully apparent. Eyebrows were raised and criticism voiced at increasing shareholder value through buybacks and dividends, and raising executive pay at a more accelerated pace than ordinary worker compensation. Research on companies among the S&P 500 showed that in the past year, most CEOs received an 11% salary increase with nearly one-third getting a 25% raise. That’s in contrast to half of the companies raising their median wages by just 3.1%. Another study on the top 300 companies in the US showed the average gap between CEO and median worker was 670-to-1, greater than the 640-to-1 ratio in 2020.

“As the world moves to a lower-carbon economy, being sustainable is a significant transition risk mitigation strategy. There aren’t just the physical risks; there is also the risk of not evolving fast enough to the changing marketplace”

Mike Thiessen, Genus Capital Management

The supply-chain disruptions and unprecedented stimulus of the past years have helped ignite a new era of inflation, creating challenges for workers, families, and business owners. Surging costs of energy and food, as well natural disasters and Russia’s military incursion into Ukraine, are pushing many economies to the brink.

Against this backdrop, industries and organizations are taking action. With its inaugural 5-Star CSR Strategies list, Wealth Professional is putting the spotlight on six organizations that are tackling the world’s problems head-on with urgency, passion, and dedication.

Mitigating climate risk

Sustainability has become a watchword across the wealth space, particularly as both investors and consumers grow more mindful of their activities’ impact on the planet. That’s why climate and the environment are top of companies’ ESG priority lists.

“We are seeing droughts, floods, heat waves, and other changing weather patterns that are affecting most people. These changes have hurt businesses and will continue to do so,” says Mike Thiessen, co-chief investment officer and chief sustainability officer at Genus Capital Management. “Other stakeholders, such as regulators and employees, are requiring greater sustainability too.”

As a certified B-corp, Genus has proven its commitment to being a force for good. The firm has taken a leading role in developing impact-focused and fossil fuel-free investment strategies for Canadian investors. Beyond that, Genus is dedicated to continually measuring and reducing its carbon footprint through energy-saving initiatives that also lead to reductions in operational costs.

“As the world moves to a lower-carbon economy, being sustainable is a significant transition risk mitigation strategy,” Thiessen says. “There aren’t just the physical risks; there is also the risk of not evolving fast enough to the changing marketplace.”

That conviction is certainly shared by Manulife, which is putting considerable assets and resources to work in aiding the global transition to a net-zero economy. As of 2021, it reported $67.4 billion in sustainable investments company-wide, with 82% of its subsidiary Manulife Investment Management’s real estate investment portfolio receiving a green building certification. The company has committed to achieving a sustainability certification for 100% of the eligible farmland managed by Manulife Investment Management by 2023.

“We know that climate change is real, and we need to be honest and open about the risks of climate change, as well as the routes that are emerging to address it,” says Sarah Chapman, global chief sustainability officer at Manulife.

“Sustainable companies, those really thinking about the long term and positioning their businesses to benefit from the investment opportunities and to protect against the risks, are much more likely to succeed over the long term”

Sarah Chapman, Manulife

Agents of change

For many organizations, corporate social responsibility initiatives have switched from being window dressing to integral to their operations and long-term strategy. While the traditional focus of corporations has been to protect the interests of shareholders, the need to take a wider view by factoring in multiple stakeholders such as employees, customers, the broader community, and the environment has become all too clear and present.

“Every firm will focus its sustainability efforts in a way that best addresses the needs of the organization and its stakeholders,” Chapman says. “Sustainable companies, those really thinking about the long-term and positioning their businesses to benefit from the investment opportunities and to protect against the risks, are much more likely to succeed over the long term.”

Ensuring sustainability at the corporate level requires solid governance structures with representation from multiple sides. Broadridge Financial Solutions, a financial technology firm whose global revenue was $5 billion in 2021, keeps abreast of developments in best practices for governance, which helps ensure its board of directors can provide thoughtful and independent representation of stockholder interests.

“We believe strong corporate governance practices and policies are integral in fostering a culture of integrity, managing a better-performing and sustainable business, and achieving long-term shareholder value,” says Martha Moen, general manager, investor communication solutions at Broadridge Canada.

One school of thought is that sustainable firms should anchor their efforts in shared value, which entails driving business value while simultaneously addressing environmental and social issues. Beyond that, companies must focus on areas where they have credibility and influence to produce real change.

“As a health and wealth company, Manulife has committed to building a better business in order to better the world,” Chapman says, highlighting the firm’s efforts to elevate the mental health and well-being of people within the organization, as well as driving financial security for its clients and upward mobility for underrepresented groups.

While Broadridge aligns with several elements of the Sustainable Development Goals established by the United Nations General Assembly, education has been a cornerstone in its campaign for sustainability. The company believes education is a human right and is engaged in community partnerships to invest in the next generation of leaders through free, quality education to enable at-risk youth and young adults to live successful and productive lives.

“We sponsor college scholarships for the children of our associates and offer tuition reimbursement for full-time employees,” Moen says.

The firm’s focus on education also dovetails into its strategy for Truth and Reconciliation in Canada. Broadridge partnered with Indspire, a registered charitable organization, to invest in the education of Indigenous Peoples to pursue post-secondary studies. Figures show 48.4% of Indigenous individuals hold a post-secondary qualification, compared to 65% for non-Indigenous students. Broadridge has also developed a four-part “Introduction to Indigenous Peoples of Canada” certification for its associates.

“We want to continue to strengthen our relationship with Indigenous Peoples and take action to chart a better path forward,” Moen says.

A call to action

Organizations leading the charge through their CSR programs have come to the same realization: the issue requires a broader definition of ownership. As well as focusing on their primary concerns like assets, profits, and market share, sustainable firms and institutions are embracing the role they play – both as actors and examples – in creating a more equitable world.

“Accountability is paramount to affecting real change. It is why we put so much focus on a culture of shared responsibility throughout our organization and why we continuously reflect on our efforts to see what we can do to improve in the future,” Chapman says.

“At the organizational and community level, other businesses need to see an example of a company that is good for the community, the environment, employees, and still financially sustainable,” Thiessen says. “If we can show the pathway and a few large companies follow, that is how we can leverage our actions and make a real difference.”

Broadridge Financial Solutions
Genus Capital Management
iA Clarington Investments
Manulife Investment Management
Ontario Securities Commission
Skyline Group of Companies

In March, Wealth Professional Canada issued a call for nominations for the inaugural 5-Star CSR list. The award recognizes companies that have developed and implemented an effective and comprehensive corporate social responsibility program. Nominators were asked to provide details of their CSR policy that is driven towards improving communities, the environment, labour practices, equality, and other issues.

To select the winners, the team relied on the help of an independent and esteemed panel of judges that included:

• Henning Ohlsson, director of sustainability at Epson Europe and managing director at Epson Deutschland GmbH

• Amy Wendel, director and global head of corporate social responsibility at LogMeIn

• Veena Jayadeva, head of enterprise ESG and chief of staff to the chief information and operations officer at Guardian Life

The judges and the WP team reviewed all nominations, examining how each company reinforced its commitment to running an economically, socially, and environmentally responsible business.