Interview: Hayley Morris Impact Sustainability
In results published by ASX, it was discovered that 57% of Australians would consider investing during or after the COVID-19 pandemic, and that 19.4 million Australians were investing by the end of 2020. Confidence is also building amongst Gen-Z and millennials, as 45% of next generation investors plan to invest in the next 12 months.
Whilst there has been an increased interest in investment funds more generally since pandemic restrictions hit, there is a growing trend towards ethical investing amongst investors, as payments into ethic and ESG funds have doubled within the year of 2020. One of the nation’s leading ethical investment banks, Australian Ethical, has $5.4 billion in funds under management and over 66,000 clients as of 31 March 2021.
With environmental equity on the minds of more and more investors, we spoke to Hayley Morris, founder of Australian powerhouse, Impact Sustainability, a company designed to help businesses better measure and mitigate their carbon footprint. In the interview, she shares her tips for selecting environmentally minded businesses and tips for building an ESG investment portfolio.
Q, Tell us about Impact Sustainability.
A, Impact Sustainability was born out of a desire to make it simpler for companies, using a similar premise to traditional accountancy, where people could measure their impact just the same way you would with finances. Once your tracking is streamlined, companies are much more empowered to be able to look at the data and their outputs and say: this is the impact that we’ve had, here’s what we can do.
Our work is really about breaking down the complexity of sustainability reform to help businesses realise that it doesn’t have to be a slog. We just need brands to come with us on a bit of an educational journey, underpinned by measurement to help them reach their net zero ambitions.
Q, Has politics shaped environmental innovation?
A, When we launched, it was a really interesting time in Australia; we were getting close to having a Prime Minister who acted on climate change. When Julia Gillard came into power, she installed carbon pricing and a controversial mining tax - the two policies that essentially ousted her from power.
From that moment on, climate policy was completely off limits politically, because the premise had been set: anytime you take a stance on it, you're removed from leadership.
Once Tony Abbot had been installed, and undid so much of the climate policy, there was very little we could do as a company to help companies move forward with environmental planning. I really feel that it was a waiting game, until things started to change in 2020.
Q, What changed in 2020?
A, In 2020, two big things shifted. We had the summer of the bushfires from 2019 to 2020, which was devastating for Australia, and burnt down the entire east coast. When mixed with the terrible droughts in Queensland and New South Wales, there was this awakening amongst voters, that maybe we are fragile, and maybe climate change really is an issue.
What do businesses need to know about managing their carbon footprint?
Part of the journey we take businesses on is to help them define their reporting: from baseline measurements and how to measure progress, to setting targets to monitor performance. Impact Sustainability’s core mission is to bring awareness and understanding to businesses to help them navigate environmental reform, without feeling overwhelmed.
Organizationally and individually, people want to take action; often, companies just don’t know how to channel the passion and enthusiasm of their people but that passion is a real resource. There's a lot of very dedicated people sitting in corporates that traditionally might have left to join a not for profit.
Increasingly, we’re seeing more people instead opt to be change makers within their organization; that person might be a CEO or Board Director, a passionate executive, or social entrepreneurial type who really pushes the agenda.
Q, Can shareholders lobby for change?
A, Investor pressure is on the rise, and there’s more cognizance of environmental impact amongst stakeholders. In turn, we’re definitely seeing more companies take action.
Shareholders can take an active role in lobbying for change— we've seen a lot of shareholder activism happening in Australia. Individuals are stepping up to help big polluters set targets and sustainability measurements whilst simultaneously lobbying for environmental legislation.
Initiatives like the Carbon Disclosure Project put pressure on businesses to release their carbon footprint and will name and shame where appropriate. Generally, there’s a lot of compliance, but it's not driven by government policy.
Q, What should investors look for when searching for ESG investment opportunities?
A, If there's some kind of report on environmental performance and sustainability, then that’s a great place to start. Another key thing to check for is to see if they’ve set a measurement baseline and targets; if neither of these exist but the organization promises a commitment to environment, searching out meaningful data points is a helpful way to cut through green wash.
From there, transparency around targets is key. This helps investors gain clarity over performance and areas that still require attention. When you see it done well, targets are measured on a simple traffic light system: on schedule, way ahead of schedule or way below schedule. When you go down that route, potential investors have better transparency over what’s working, rather than a pretty picture of what’s going really well; I think that's really important.
As a new investor, take a look at supply chains and end of life process— avoid companies that seem to operate through blinkers and don’t look at their carbon trail. For instance, where supermarkets cut the costs of milk, and it’s suddenly only $1, there’s a knock-on effect further down the chain. In this example, farmers are pushed to the wall on what they can afford for animal welfare and environmental innovation because they don’t have the resource to pay for tools that could improve sustainability efforts. When glaring omissions around key stakeholder groups and supply chain I always see that as something to be wary of.
Whilst innovation should be lauded, scrutinise companies who seem to be taking a scattergun approach to becoming more sustainable. One example of “we're doing good things but we don’t know why” might be a shoe maker funding education in Africa. Whilst this effort is a nice start, what has this got to do with the production shoe?
What’s more useful to know is: who is making your shoe? What are the welfare standards of your factories? Does your company pay a living wage to workers? What’s the quality of the materials? Where do you source the raw materials? Do you have slave labour in your supply chain? What's the packaging involved in it? What are you doing about end of life?
If your organization wants to support education, what about educating the families of the workers, that working in factories and building your shoes?
These are all more meaningful questions to ask, and helps you to cut through the noise.
To learn more about the work of Impact Sustainability, get involved and develop your ESG portfolio, visit their website here.
