5 books: Socially responsible investing
These are some of my favourite SRI (socially responsible investing) and Impact investing related books with you. In the industry, we call it sustainable investing so I may sometimes in my video, refer to it in this way.
I hope these books will help give you an overview of the values and approach to sustainability, business, economics and demonstrate how businesses can be financially sustainable, personally rewarding and healthier for the planet and all its inhabitants.
Transcript with video below:
1. Let My People Go Surfing: The Education of a Reluctant Businessman--Including 10 More Years of Business Unusual by Yvon Chouinard
My first recommendation is Let My People Go Surfing: The Education of a Reluctant Businessman by Yvon Chouinard, who is an American rock climber, environmentalist, and outdoor industry billionaire businessman.
In this memoir, the founder of Patagonia reveals how he wove his personal values into the fabric of his company from the very beginning. Chouinard wanted Patagonia not only to cater to other rock climbing and surfing enthusiasts like himself but also to govern itself by the highest standards for environmental sustainability and social responsibility.
Although he talks about the philosophies that make Patagonia the company of integrity that it is today, what is most insightful is Chouinard's personal story. From childhood he developed a passion for the outdoors, and when he was 18 years old he developed and sold his own rock climbing equipment from the back of his car. Clearly, he was determined to live and work by his own values. This book is an inspiring example of how companies can build their business model around SRI values. Patagonia is also incredibly successful in material terms.
If you visit Patagonia’s website, you will see their home page includes Activism which is quite unusual. Since 1985, Patagonia has pledged 1% of sales to the preservation and restoration of the natural environment which is pretty remarkable. Their core values are also such an interesting read and include ‘Use business to protect nature’ and ‘cause no unnecessary harm’. So simple and powerful.
Have you ever shopped at Patagonia? A client of mine told me a great story - that they had a ‘Worn Wear’ Tour across Europe and stopped near his office in Shoreditch, London to repair Patagonia clothing for free. Their brand is of course about repair and reuse - lovely to see this level of concrete congruence between stated values & actions.
A very inspiring read.
2. Building Social Business: The New Kind of Capitalism that Serves Humanity's Most Pressing Needs by Muhammad Yunus
My second recommendation for you is Building Social Business: The New Kind of Capitalism that Serves Humanity's Most Pressing Needs by Muhammad Yunus, who is a Bangladeshi social entrepreneur, banker and economist.
In the author's words, "Poverty is not created by poor people. It is created by the system we have built, the institutions we have designed, and the concepts we have formulated." While Muhammad Yunus was teaching economics at Chittagong University in 1970s Bangladesh, he found it difficult to ignore the hunger and poverty all around him.
So he founded a bank for the poor, who needed small amounts of capital to start their own businesses - as no banks back then, would lend them money leaving them vulnerable to loan sharks and effectively enslaving them to interest for life...his work won him the Nobel Prize in 2006 and he is called the inventor of micro-lending. His book notes that a large number of beggars also took advantage of the loan - people are keen to work and have their own sense of purpose and dignity. This part touched me deeply as seeing begging especially where I grew up in India or exploitation of the financially poor- really makes me feel sad on many levels.
A social business is one in which the owners are motivated to solve a social problem such as unemployment or malnutrition. Profits are ploughed back into the company instead of being paid out as dividends. And unlike a charity or NGO which has to rely on donations to keep running, a social business is profit-making and therefore financially sustainable. Sounds really win-win-win all the way to me!
Social businesses make investment decisions based on the potential effectiveness of a social cause rather than just profit. In this book, Yunus explains the concept of a social business, gives examples of existing social businesses, and shares tips on how you can get involved in this movement. Do check out his Ted talk.
Yunus talks about how we humans don’t only care about maximizing profit, in reality we get fulfillment from many other sources besides money. Kind of ties in really well with socially responsible investing - where you are interested not just in maximum return, you are also being prosocial and caring about other aspects of harm to the environment, workers, community, etc.
A good example of a social enterprise -as we call it in the UK- is The Big Issue which helps people who are homeless or vulnerably housed to earn a legitimate income.
3. Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism by Jeff Gramm
The third book I recommend is Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism by Jeff Gramm, a hedge fund co-founder and Columbia Business School Professor.
If you've ever wondered what goes on at boardroom meetings, or wanted to understand the G in ESG - corporate governance...you'll find this book quite helpful. Gramm’s book focuses on eight investor’s letters from famous investors including Warren Buffett, and Carl Icahn, that sum up some of the great shareholder battles in the history of American business from the 1920’s to more recent times. Battles between shareholders as the owners of companies, against some managers who tended to run the companies in their own interests instead.
In the early 80’s, you could say that big, passive investors were very checked out and now, we have seen more recently Larry Fink of Blackrock (a large player in the passive investments fund space) writing clearly in his ‘Dear Ceo’ letter that “climate risk is investment risk”.
Gramm also talks about shareholder activism at its worst - when hedge funds manipulate land-grabs at the expense of a company’s long term prospects. He has a very engaging story-telling style of writing.
4. Impact: Reshaping capitalism to drive real change
The fourth book on my list today is Impact: Reshaping capitalism to drive real change by Sir Ronald Cohen.Sir Ronald Cohen is known as the father of British venture capital.
If you want to learn more about Impact investing, this is a great book to read and by a British author too.
ESG is a word used quite a lot now and Impact investing is different in two specific ways, he explains. Impact investing is not just about avoiding a negative impact like ESG investing does but to create a positive one and it insists on measuring the impact created.
The book is filled with examples from all over the world - the US, UK, Africa, India, Israel...including Grameen Bank from this book and Patagonia. It also includes examples of stars on the scene like Japan’s Government Pension Investment fund, the world’s largest pension fund with 1.5 trillion USD under management, that allocated 10% of its stock holdings in 2017 to environmentally and socially responsible investments. He explains: If more savers of pensions exercise influence on how they wanted their portfolios invested, pension fund trustees would have to offer more options.
Financing of the UN SDG’s (United Nations Sustainable Development Goals) aimed to hit a number of targets like water for all and protection of human rights by 2030 would need an investment of an additional 30 trillion USD and he shows how this is possible if the private sector could fill that gap.
Hopeful we see some examples of impact unicorns soon, something Sir Cohen talks about in his book. “Impact unicorns” are startups valued at over 1 billion USD that promise to improve one billion lives.
I found the book really interesting and once I started reading it, I could not stop, which to me is a really good sign - the book grabs you in.
5. Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth
The fifth book on my list is Doughnut Economics Seven Ways to Think Like a 21st-Century Economist by Kate Raworth. Kate is an English economist working for the University of Oxford and the University of Cambridge.
The book has a large number of positive reviews on Amazon when I had a quick peek. It shares a vision for a system that balances human needs without exhausting the planet. it's not just a “hippy” approach; it actually already works.
The image of the doughnut is used to share just that - how we can aim for balance: meet needs like food, housing, healthcare...while ensuring we do not place too much pressure on Earth’s life-supporting systems – such as a stable climate & fertile soils.
My economics professor in college nearly put me off the subject; so don’t let that word economics put you off. Kate writes in really plain, non- jargony English and helps you understand how 21st century Economics needs to move away from outdated ways of just chasing endless GDP growth which isn’t meeting needs with high income inequality and ecological collapse.. To a new economic mindset - focused on balance.
And finally, some words from my friend Andy who loves this book and helped me with this last bit: "The greatness of this book lies in the simplicity of Kate’s vision of how economic transformation can sustainably serve ALL of us. Not just a brilliant theory, but a practical road map to create Thriving Cities. Already implemented in Amsterdam to build in resilience post-Covid 19, Doughnut Economics is an inspirational survival manual."
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Those are all my SRI related book recommendations for you. I am Cleona, founder of Conscious money.
Thank you for watching!
