Corporations double down on sustainable investing

by | May 4, 2023 | Blog

Major corporations are betting heavily on sustainability. Apple just doubled to $400 million its climate fund — one dedicated to saving ecosystems and removing carbon from the air. Earlier this year, BP said it would significantly increase by as much as $8 billion investments in alternative energy solutions. Meanwhile, fashion retailers like H&M Group, Lululemon, Chanel, Ralph Lauren, and others continue to plough money into sustainable innovations. 

Some companies are boosting investments to better offset (or reduce) their own environmental impacts. Unilever, for example, is using its €1 billion climate and nature fund to help achieve net zero by 2039, amongstother sustainability goals. Others invest to scope out opportunities. GV, formerly known as Google Ventures, has over $8 billion in assets under management across 400 investeeswith technologies ranging from electric delivery drones to meatless meat. So far, GV has acquired 175 of its portfolio companies.

Sustainable investing worldwide is booming. ESG-mandated assets[1] are on track to represent half of all professionally managed assets globally by 2024, predicts Deloitte. In early 2020 the value of sustainable investment in major financial markets globally stood at $35.3 trillion — a 15% increase from 2018 — and accounted for 36% of all professionally managed assets across the US, Canada, Japan, Australasia and Europe.

Who’s doing what

  • Apple’s Restore Fund is investing $400 million to protect ecosystems and remove carbon emissions from the atmosphere. With this fund, Apple aims to meet its net zero goals while generating a financial return. The Chyulu Hills project, for example, is a forest restoration initiative in Kenya which removed 167,000 metric tonnes of carbon from the air in 2021. Further nature restoration projects in Brazil and Paraguay are expected to remove 1 million metric tonnes of carbon per year by 2025, to be measured by remote sensing technologies and high-resolution satellite imagery.
  • Coca-Cola HBC Ventures ran a €100K sustainable packaging challenge to identify and fund innovative solutions in 2022. The venture focusses on sustainable packaging and carbon reduction to achieve Coca-Cola HBC’s goals on waste reduction, water use and net zero emissions. The challenge was explicitly run to help the company solve its critical packaging issue. The winner was Green Big, a French startup that has collected and recycled 100 million plastic bottles through b:bot, a machine that turns plastic into flakes. 90% turn into new bottles and 10% become textile fibres. 
  • BP’s VC arm bp ventures just invested $11 million in electric delivery vehicles in India, a key market for the company’s electrification business. The fund has invested over $1 billion since its launch, focussing heavily on energy transition to help BP reach its net zero goals while delivering financial value. The investment in low carbon technologies comprised 30% of the parent company’s total investment in 2022, up from around 3% in 2019. It plans for additional investments of up to $16 billion by 2030, to be divided equally between alternative energy solutions and oil and gas.
  • H&M Group’s investment arm H&M CO:LAB has ramped up its investments in sustainable materials, including fibres made from cotton waste and polyester from waste carbon dioxide. It aims to support H&M Group’s long-term growth by investing in solutions that help the company reach its circularity and climate goals. For example, it’s using biological dyeing technology from investee Colorifix to reduce the environmental impacts of traditional dyeing processes, such as water use and pollution.

[1] Defined here as professionally managed assets in which ESG issues are considered in selecting investments or shareholder resolutions are filed on ESG issues at publicly traded companies. 

Apple CEO misses the point and the opportunity

by | Sep 1, 2016 | Blog

Apple CEO Tim Cook is missing the opportunity to enhance the brand and establish his reputation as a visionary.

“Maddening and comes from a political place” was Apple CEO Tim Cook’s response today, to the EU ruling that Apple has illegally avoided $14bn in taxes through an agreement with the Irish government.

This isn’t the first time Tim Cook has felt victimized: in December 2014, he was “deeply offended” by revelations in the BBC Panorama program that workers in its supply chain, especially in tin mines, continue to suffer from very poor conditions. For one of the world’s most powerful men, Tim Cook does seem hyper-sensitive to external scrutiny.

Questioning the motivation of journalists and government officials is Apple’s stock response to those daring to question the company’s ethics. Regardless of the details of an intrinsically complex tax argument, attacking Apple’s ethical critics is the wrong strategy for one of the world’s pre-eminent CEOs.

Apple has amassed $215bn in cash in foreign bank accounts (see charts all courtesy of Statista www.statista.com) compared to $17bn in the US. In context this is four times the company’s annual profit and more than an entire year’s revenue. It’s also close to the GDP of Ireland, the EU country facilitating Apple’s low tax strategy (about $250bn).

The company literally has more cash than it knows what to do with, but still sees its best interests in defending the mounting pile, with an army of tax avoidance advisers and lawyers.

Step back and consider how Apple could alternatively deploy its resources. Few companies have a greater stake in the future. The Apple brand is the second most valuable in the world. According to WPP agency BrandZ, Apple is just 0.5% less valuable than Google at number one. An icon of the tech sector, everyone expects Apple to be more than a modern company – to be visionary. Of course this starts with its products, but extends to its role in the world.

The company did make an impressive commitment to climate change ahead of the COP21 conference, committing to install renewable generation in China equivalent to the needs of all its factories. But tax is Tim Cook’s Achilles heel.

Apple is by no means alone in pursuing tax reduction strategies, but Apple isn’t your average company – or shouldn’t be. While tax strategy will have some impact on Apple’s share price, the company’s intrinsic value is based on its product innovation and brand reputation.

Apple’s reputation is very much at risk from a protracted legal battle with the EU, defending what in the minds of the public is indefensible: company with the cash resources whole countries would envy, twisting and turning to avoid paying for social services like education, health and security on which the company itself depends.

The opportunity for Tim Cook, is to call time on tax avoidance, and state a new socially responsible tax policy for Apple, and as an example to global corporations. The value added to their brand would be significant and the personal legacy of Tim Cook as a visionary leader established.