The Money Behind Corporate Purpose

Best-selling author Daniel Goleman explains impact investing, where Wall Street and the purpose movement meet.

Daniel Goleman, author of the bestseller “Emotional Intelligence,” is a regular contributor to Korn Ferry. His latest book, "Altered Traits: Science Reveals How Meditation Changes Your Mind, Brain, and Body," is available now. 

Oatly is a Swedish oat milk brand whose packaging reads somewhere between a conversation with your best friend and a manifesto for conscious business. It promises “to be a good company,” strives “to produce the cleanest, most responsible products on the market” and is driven “to help people upgrade their lives” before “the reckless pursuit of profit.”

In 2018, research out of Oxford University found that cow’s milk has more than three times the environmental impact of non-dairy milk. Given that 25% of worldwide greenhouse gas emissions comes from food production, Oatly’s branding communicates a promise: drink this milk and help build a better world.

How big of a selling point is this for the growing cadre of purpose-minded consumers, spearheaded by ethically-motivated Gen Zers and millennials?

The answer: BIG.

Oatly's revenue grew from $1.5 million to more than $15 million between 2017 and 2018 and is estimated to double again this year.

While China Resources Verlin Health Investment Company doesn’t identify as an impact investor, by providing Oatly with enough capital to expand their factories and move into the US market, they fall right in step with a growing trend. “Impact investing, ” the idea of investing for some measurable and beneficial impact plus a financial return, was coined in 2007. Since then $502 billion has been invested around the globe in businesses and funds poised to make a positive impact.

“In recent years, affluent people have become far more likely to ask existential questions about the purpose of their money,” says Camilla Stowell, managing director and head of wealth and investment management at Coutts International. “They want to use their funds proactively, and they want to make the world better for future generations.”

A recent analysis of more than 1,300 global impact investors found that the average impact investor has $452 million in assets under management. That figure includes several organizations managing very large impact investing portfolios.

The growth of impact investing has at least three causes. The first: a broad range of investors show an increasing desire to align their investments with their values. This interest is especially high among women and millennials, groups slated to control more and more wealth in the years to come. Second, as the norms of business begin to change, investors have the growing understanding that social and environmental impact is simply good business; it leads to more profitability over the long haul. Last, in the past five years the Paris Agreement on Climate Change and the United Nations’ Sustainable Development Goals (SDGs) have explicitly called for private capital. These global initiatives are putting more pressure on businesses to fund solutions to social and environmental issues such as climate change.

Is this new wave of conscious investing big enough to put a dent one of in the world’s most pressing problems? The UN estimates that it’s 17 SDGs will require $5 to $7 trillion in yearly commitments of private capital over the next ten years.

Tom Burke, professor of environmental policy and founder of E3G, an NGO involved in climate diplomacy, put it this way: “If you want to change the way the world goes round, first you have to change the way money goes around.”

His statement inspired an obvious question: ‘What changes the way money goes around?’

Burke’s reply: “Conversation.”

When Oatly first unveiled its new packaging to its internal teams, someone stood up and said it was “the worst, most childish packaging they had ever seen.” Still, Oatly went forward. After their new branding hit the shelves, they ran full-page newspaper ads they called “Bigfoot,” a lengthy description of their company’s beliefs including their view on modern food farming, race, and equality. The ad includes the statement that “companies have as much responsibility as politicians for building a society that the rest of the world can admire.”

Few brands dare to make such straightforward political statements. Agree or not, one thing is clear: a small carton of oat milk can spark some big conversations.

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