Written by: Isabel Nuesse

In the system that we’re currently living in, money reigns in every aspect of our lives. Wherever money flows in our economy will dictate the priorities of our culture. If this is the case, what can we do in the short-term to influence where money is flowing and, therefore, influence the priorities of our time? 

In October 2021, Jags Walia, a portfolio manager and responsible investor since 2008,  gave a WEAll Talk “From Nudge to Push – Money, Power and CO2” where he shared his own experience of influencing big companies to reduce their CO2 emissions as a smart investment decision. 

He gave our audience his take on how to do this, and assurance that he’s not alone working on these bold objectives.

As an investor, Jags told us he has two priorities: 

  1. Make money for his clients;
  2. Consider the environmental implications of those decisions, to reduce harm and the amount of CO2 emitted into the atmosphere.

There are a number of strategies to go about meeting these goals, and, rather than shying away from today’s big polluters as potential clients, Jags operates on the notion that, by  choosing to work with a dirty company, he can have a bigger impact by directly  influencing their decision making. You can read his Investment Guide here.

“I find the companies that are not the saints today – and try to change their behavior and rehabilitate them.”

He shared a story of a client he worked with back in 2019. The company had proposed to build two brand new coal power plants. Of course, he was adamantly against this decision. But rather than coming out and saying his opinion, he needed to show them that making such a choice was bad business. Why? Well, the average lifespan of a coal power plant is 48 years, and he was predicting that, in 48 years, coal will not be the primary energy resource that we use and, therefore, the return on their investment wouldn’t be realized. In the end, after 8 long months of back and forth, the company decided that they wouldn’t go ahead with the power plants and not only that, but they vowed never to build another coal fired power plant again. 

This was a huge win for Jags and his team, as the outcome of their work turned out to be a long-term company-wide divestment from coal, rather than something restrained to one single project within the company. 

How does Jags do it? He shared his 3 main strategies  for how to engage with companies effectively.

  1. Understand the complexity of the situation that the company is in. Really put yourself in the shoes of these businesses. Who are their stakeholders? Who are the beholden to? What steers their decision making?
  2. Find the right question(s) to ask. When engaging with any company, find out what is possible for them within their context. Don’t suggest something outrageous for them to achieve without first understanding what is reasonable. 
  3. Evaluate what each company says they’re doing vs. what they are actually doing. Many companies will boast about their sustainability achievements, but these can often be overembellished. Do your due diligence to better understand what kinds of commitments the company is actually making. 

One of the participantsasked Jags about the Key Performance Indicators he looks at when evaluating whether a company is ‘clean’ or ‘dirty’. 

He said that he looks at three things, 

  1. Willingness
  2. Ability 
  3. Commitment 

In other words, are the companies willing to make a change? Is it possible and are they able to make it? And, can they get paid to commit to making significant changes? Still working within the current framework, Jags understands that in order for companies to decarbonize, they still have to meet their financial obligations and therefore be paid to do it. 

There is always a balance between uprooting what exists, and improving the status quo. This talk with Jags showed a clear example of how to improve the current situation within the existing boundaries or our system. 

If you missed the talk or want to engage further with this topic, you can watch the full talk recording on our YouTube channel:

Event Recap from July 2020

What is free trade? And why is free trade problematic?

Christian Felber, author of Trading For Good and WEAll Ambassador, explained this exact concept on a WEAll Talk on Ethical World Trade

Christian calls free trade ‘enforced trade’. ‘Enforced’ because countries that are young can be punished by international law or tribunals if they refuse to open borders. 

What makes free trade so unique is that the only counter solution is Protectionism, where countries close all borders and do not participate in any kind of international trade. 

These two avenues for trade are extreme and don’t offer any solution founded in protecting human rights. 

The goal of free trade, according to the EU is, “progressive abolition or restrictions of international trade of Foreign Direct Investment and of lowering of customs and other barriers.” 

In other words, the overarching goals of free trade laws just eliminate restrictions. You are free of any responsibility of how trade may impact local communities. Countries are convinced to open borders because “it’s good for trade!” 

Instead the goal could be, “open borders because it will provide a more thriving livelihood for your community”. A country’s decision to open borders, must be their decision, not an enforced decision by the international trade organisations. 

So what’s the alternative?

In a Wellbeing Economy, the goal of trade would be founded on human rights, labour rights, social cohesion, biodiversity, climate protection, and cultural diversity. 

Christian advises that we must stop considering trade as the end but rather, as a means to the end; make the goals of trade to support the international laws for human rights; and then adjust the means according to that overarching goal. 

This can mean that trade agreements are welcome  – if and only if they support a country’s goals. But if it puts a country at risk or the goals of that country at risk, they can opt out without punishment. 

He makes a good point about the language that is used with trade. Similar to the logic that everyone who criticises capitalism is a socialist or everyone who criticises excessive inequality is for the elimination of inequality: everyone who criticises free trade is automatically considered a protectionist. This kind of thinking can be no longer. 

In order to shift toward Ethical World Trade, Christian offers 6 steps: 

  1. Multilateral UN agreement: The World Trade Organisation is not a part of the UN and therefore, it’s goals do not align with wider UN policies on human and climate rights. These must be linked and therefore, a multilateral UN agreement on trade must be created. 
  2. Commitment to trade equilibrium: There must be an international agreement to avoid trade imbalance. 
  3. No equal treatment of poorer or richer countries: Countries who are poorer cannot be put on the same playing field as countries that are richer. Christan notes that the US was highly protectionist up until WWII, as was Great Britain. Protecting their borders and producing locally helped bring them to a stage to then produce internationally. Other countries have to be given this freedom as well. 
  4. No more political straight jackets: Milton Freedman suggested putting a “straight jacket” on countries, so that they open their borders and support international trade, which, in theory, would ultimately  make them richer. Unfortunately, this has not played out in reality. Christian counters this with the idea of giving everyone a dancers dress, so each country can make their own trade policies. This allows for flexibility, so that if a country sees engaging only in their indigenous economies as the best path forward, they can do so without repercussions from international counterparts. 
  5. Priority for Local markets: Countries need to continue to prioritise local production in communities. If it can be made locally, encourage this, as opposed to disincentivising local production to promote international trade.
  6. Limit and diminish power of multinational corporations: Corporations need to be better held to account for the impacts of their operations. The playing field for local businesses to compete with multinationals is not level. Global governance is needed to ensure corporations’ power is checked before it causes harm to people and planet. 

Christian proposes a new free trade defined by how open or protective a country wants to be. 

While Christian spoke about the changes needed to shift business and trade at the international level toward a Wellbeing Economy, there is much work to be done at the level of individual businesses. 

This month WEAll is publishing a new WEAll Business Briefing Paper, which also links to WEAll’s Business for Wellbeing Guide published last year. Both publications compile insights from experts on the important role that businesses can and must play to support the creation of a Wellbeing Economy.  

These outputs, coupled together, communicate a common vision for how business and governments can work together on a global scale, to deliver global wellbeing on a healthy planet. Now it is time to act on this learning.

Stay tuned for the Business briefing paper coming out next week and the Business Guide here, and watch Christian’s talk here.