Purposeful Conversations With James Cronan
3 October 2018 at 7:15 am
Ellie Nikakis from Vollie sits down with James Cronan of ESG Responsible Investments to discuss ethical investing, in the latest in our series of Purposeful Conversations with CSR professionals.
James Cronan began his journey in the sustainability space six years ago, interested in the emergence of sustainability relating with financial outcomes. Fast forward to 2018 and enter thriving investment group ESG Responsible Investments. With a focus on transforming environmental, social and governance policies for businesses looking to improve their performance, ESG is all too conscious of staying up to date with where the market is headed and in whose hands it will be.
“Ninety per cent of millennials want to grow their investments by responsibly investing, there’s this huge shift of money,” Cronan says, recalling statistics like “two out of every three dollars are going to be controlled by millennials in 2030”.
For the ESG partner, it’s become increasingly important to look at what millennials value, and how those values link with organisations. Though they are the driving force behind many of the movements towards ethical and sustainable practice that we see in business today, they’re not the only stakeholders in the picture.
“Even mums and dads and retail investors are now speaking to their financial planners and saying, ‘Hey, I want to use ESG as an investment framework, I want to look at ethical investments, I don’t want to invest in coal or other things I don’t align with personally’,” Cronan explains.
“The structures that these investments require is going to be around that transparency on what are not just the financial risks of an investment, but also the non-financial risks, the risks that aren’t on that balance sheet.”
It’s a proven formula – Cronan cites the many recent studies that show their strategy’s success, and the significant importance of looking deeper at possible investment risks that aren’t traditionally considered.
“Data has shown that if you’re investing using ESG risk mitigation, that’s not just balance sheet performance, you’re going to outperform the underlying market,” he says.
“There’s all of this data coming out that’s saying that you need to integrate your decision-making process with these outside-of-the-balance-sheet risks. Baby boomers, when they inherited all of their wealth were just looking at pure bottom line performance, and we now know that if you’re not investing ethically, or you’re not looking at external risks that aren’t on that balance sheet, you’re not going to perform as well.”
Transparency is a huge factor in the application of ESG policies and reporting, and it’s another massive reason corporates are starting to make the switch – with growing pressure to address the responsibilities they have to shareholders and investors, it becomes a natural choice for most companies.
“It comes to, what is your purpose as a business? What are you trying to achieve? How do you connect with your shareholders or investors, and how do you deal with your customers?” Cronan says.
“I think all of those key driving decision makers are moving into this ethical pathway, and if you as a brand or as an organisation want to communicate with them, you need to be addressing what inspires them, what motivates them and what influences them.
“This ethical pathway, and CSR certainly as a major component of that, is driving all of that decision making. So it’s, how do you actually communicate effectively to all of this growing force of people that actually value this as not just a risk mitigation tool, not just another cost.”
About the author: Ellie Nikakis is the PR and marketing coordinator for Vollie, an online marketplace that connects skilled people to not for profits, charities, and social enterprises for skills-based online volunteering.
This article is part of a monthly series of Purposeful Conversations by Vollie, in which we sit down with a range of CSR managers in the Australian business landscape to talk about their interpretations of the CSR space in 2018.