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Welcome to October and the spooky season! Here’s something that’s scaring American businesses – The Great Resignation. It’s the term being used to describe the large number of folks quitting their jobs this year as we emerge from the crippling pandemic and economic crisis. In July alone, four million people resigned and the number of job openings climbed to a record 10.9 million. The reasons for this are many and complicated (we dive into child care below), but it has brought a sharper focus on the relationship between the wellbeing of the employees and the wellbeing of the business.
As organizations struggle to retain their employees, investors are also keen to know more about their policies, as it directly affects business performance. Even though executives may consider revealing such internal data risky, a willingness to be transparent and show progress or efforts to improve could draw more shareholders, customers and workers.
Unfortunately there’s some way to go before shareholders can make well-informed decisions. Our friends at JUST Capital recently analyzed the disclosure habits of the 100 largest U.S. employers across 28 key human capital metrics, like turnover, minimum wages, and hiring rate by gender, and found less than 20% of firms reporting on the majority of metrics. Despite the raging minimum wage debate nationwide, just 1 in 5 revealed theirs, and although there were commitments to diversity and inclusion during last year’s Black Lives Matter protests, only 13% revealed the share of new hires who were people of color.
But changes are afoot. In August the head of the SEC, the federal agency meant to protect investors, indicated new disclosure rules are on the way. Until then, we’ll keep sharing other resources you can use, like Fortune’s latest ranking of best places to work based on employee surveys conducted during this difficult time. To no one’s surprise, the findings revealed that “workplaces that put employee health first – both physical and psychological – enjoyed record jumps in employee experience scores” and raves on many fronts. You can also look at how companies pay their median worker compared to the CEO here.
The invisible heart of the markets
If you tune into business news on the television, listen to your friends in finance talk shop at a bar, or even watch the latest season of Showtime drama Billions, chances are you’ve heard a mention of sustainable investing. It’s a tectonic shift for Wall Street and the sustainability space is exploding with new products, research, data, and terms. In fact, there are so many terms that we’re building a glossary.
And we must confess a pet peeve of ours – commentators and casual market watchers sometimes using these terms interchangeably despite them having different meanings. Take, impact investing.
Some concepts that ≠ impact investing –
- Corporate social responsibility (CSR)
- ESG scores
- Positive/negative screening
- Sustainable investing
- Socially responsible investing
- Carbon neutral/ Net zero carbon
- Venture philanthropy
While all of these may speak to varying degrees of aligning your investments with your values, impact investing has a pretty specific meaning: impact investing is the practice of investing in a company or fund that seeks to generate positive social and environmental impact along with financial returns. This dual goal, pursued by both the investors and investees, is what sets impact investing apart from other forms of sustainable investing or charity. For those looking to grow their money and make a difference, it’s the proverbial killing of two birds with one stone (or more fittingly, rehabilitating two birds with one warm, recycled cardboard box).