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There has been a lot of talk this week about Tonga and the unexpected, rare eruption of an undersea volcano in the Pacific that seemed to catch everyone by surprise. Meanwhile, businesses have been dealing with their own tsunami of sorts: trying to figure out how to stem the tide of workers leaving their jobs. This week, the world’s largest investor, Blackrock’s CEO Larry Fink, in his annual letter to the companies his firm is investing in, touches mightily on the subject:
“Workers demanding more from their employers is an essential feature of effective capitalism. It drives prosperity and creates a more competitive landscape for talent, pushing companies to create better, more innovative environments for their employees – actions that will help them achieve greater profits for their shareholders. Companies that deliver are reaping the rewards.”
It’s well recognized that the growing labor crisis is real with an unprecedented 4.5 million workers quitting their jobs in December alone, leaving many companies without enough needed workers to maintain normal operations. As executives scramble to throw resources at the problem of attracting and retaining employees, including everything from increased contributions to 401Ks to unlimited vacation days to pet insurance, there is recognition that this could, at last, be an opportunity to deal with the more significant issues in the labor market, such as paying a liveable wage, closing the wage gap among different segments of employees, or offering paid sick leave. Even the use of contract workers is under review by many companies, as the higher turnover rate and the resulting business model and societal implications of relying on third-parties become better understood.
For values-aligned and ESG investors, these trends are worth taking note of. As Fink’s letter points out, combined with a growing body of industry data, focusing on employees’ well-being and satisfaction is simply good for business and for the bottom line.
News You Can Use
- Crushed your December performance review? So did the 2021 ESG and Sustainable Fund — outperforming major indexes and delivering strong and “competitive returns.” This comes on the back of a multi-year dramatic growth of capital flowing into ESG ETFs, and debunks claims that investing with both financial and sustainable goals is “concessionary.”
- Cost of recycled plastic has doubled in the last year, given the demand created by a wide range of companies like Coca-Cola, Nestlé and Danone that have pledged to increase recycled content of their packaging by 2025.
- State Street Global Advisors, one of the world’s biggest asset managers, updated its policies, requiring all companies in which it invests to have at least one woman on their boards to gain the firm’s support during the upcoming proxy season. This expands their previous policy, which only applied to investments in companies represented on major stock indexes, and signals a trend that more and more companies, no matter their market or size, will be expected to increase board diversity.
- In 2021, only 2% of all investments from US Venture Capital firms went to companies founded by women. When women teamed up with men, these companies received 15.6% of all capital raised last year. While the total amount of investment capital that went to women led startups increased, all-male teams received over 82% of all the VC capital invested last year.
- In an effort to topple the “pyramid effect”—where the number of women shrinks as one looks higher in the corporate ranks—a new non-profit named Journey has been launched. Anchored by 25 leading female executives, from Ariel’s Mellody Hobson to GM’s Mary Barra and Goldman Sachs’ Dina Powell McCormick, Journey will pair up-and-coming female executives with influential female leaders to give them the tools they need to (hopefully) break down many of the barriers that can hinder promotions and more diversity in the C-suite.