My latest book is Fifth in my “As I…” series, “(Such as ‘As I was thinking,’ As I see it’..) this latest title is: .As I Search for the Good Soul of International Business and Trade”. I address the need to consider and focus on the good soul and how such consideration needs to reflect the spiritual and emotional links to core issues of international business and trade. I propose that a responsible focus on the soul plays a key international role in strengthening freedom, progress and quality of life.
To guarantee your own personal and hand signed copy , pre-order now for just $45!
Published in the America Economia (March-April 2018), “Redirecting Capital to Sustainable Investment” discusses impact investing among Latin American businesses. To read this article in Spanish, click here.
March – April 2018
Redirecting Capital to Sustainable Investment
Victoria Galeano and Jerry Haar
We are living at an unprecedented time in human history. Never before have consumers been so empowered to influence corporate behavior and firms’ impact on society and the environment. New market incentives driven by selective consumer groups such as millennials and women have begun to redirect capital towards enterprises the importance of being good corporate citizens.
To be a good corporate citizen is consonant with high standards of ESG (environmental, social, and governance). Many investors consider looking for ESG-oriented firms, believing they generate higher financial returns in the long term. More and more available information validates this correlation. For example, the Institute of Sustainable Investing’s extensive study of mutual funds found that sustainable investments in most cases equal or exceed the financial performance of traditional investments.
This has generated a search for sustainable investments and transactions of “green capital” and a proliferation of funds focused on sustainable investment. For example, the market for green equities reached a new historical record of over $200 billion in total issues in 2017. According to Bank of America, $21.4 trillion of global stocks embody ESG criteria.
There presently exist diverse strategies for selecting investments that incorporate ESG. In many funds, the selection process is based on monitoring sustainability indices. These indices compile a list of enterprises and score them based on ESG criteria. In the case of Latin America, the Inter-American Development Bank utilizes Index Americas, the first index to be launched by a multilateral development bank. Index Americas selects 100 enterprises that are both the most sustainable, and have the largest presence in the region.
It is noteworthy that the Latin American financial system has slowly embraced this worldwide tendency, and increasingly, pension funds and other investment funds are incorporating sustainability investments in their portfolios. The leading stock market in Brazil already has an index of corporate sustainability, and the stock markets in Argentina, Chile, and MILA (the integrated stock exchanges of Colombia, Chile, Mexico, and Peru) are in the process of developing similar criteria. At the same time, Latin American businesses are more and more cognizant of the importance of incorporating ESG in their operations. Firms such as FEMSA, Cemex, and Banco Itaú are industry leaders in attaining high standards of ESG.
These enterprises do not only allocate resources to improve their technological systems and internal processes but also invest in broadening their knowledge base of sustainability. In response to this need, various universities have incorporated sustainability into their MBA programs.
Attaining high standards of ESG brings multiple benefits to companies and helps firms achieve larger goals in many instances. Recognizably, however, the proliferation of rankings and standards requires significant resources in the generation of reports, scorecards, and audits. Additionally, obtaining results will invariably require the reconfiguration of internal processes or investment in costly equipment and technologies.
Nevertheless, enterprises that are able to integrate ESG principles in their business models and continually improve their sustainability are those that will be able to generate long-term economic benefits while engaging in behavior that is healthy and beneficial to people, the environment, and society at large.
Victoria Galeano is the founder and director of PRISSMA, a consultancy specializing in the financing of sustainable projects and products.
Jerry Haar is a business professor at Florida International University and a global fellow of the Woodrow Wilson Center in Washington, D.C.
After six decades of communist rule in Cuba, the island is now governed by someone outside of the Castro family for the first time since the 1959 revolution. The new leader, Miguel Diaz-Canel, was vice president and a provincial party chief.
Many believe that the political and economic status quo of the Caribbean nation is unlikely to change. However, lessons from the business world indicate that any change in an organization’s key leaders ushers in a new era for a company.
Whether it’s an acquisition, merger or the appointment of a new CEO, these transformations usually carry enormous repercussions for key functions.
New priorities are typically manifested by new promotions, new players, new rules and new aims. In turn, this results in shifting financial conditions, new private developments and new service assortments.
When applying such transition effects onto countries, one could argue that there is an opportunity for President Trump to act decisively in formalizing and normalizing trade relations with Cuba if conciliatory and meaningful changes are made.
For example, changes could be made so that there are no longer higher hotel rates for Americans than for Europeans, as well as no more ongoing accusations or regurgitation of historic events that have long passed.
Curative International Marketing, a theory developed at Georgetown University’s McDonough School of Business, directly addresses past errors and focuses on long-term restitution and improvements.
Such a move would advance U.S. businesses and their strategic interests while allowing Cuban citizens to operate in the private sector independent of the communist regime.
So far in the Trump administration, the opposite tactic has been taken by restricting American travel and trade with Cuba, which is a reversal of President Barack Obama’s policies.
A pro-business posture allows for increased commercial relations (beyond cigars) that would be more effective in countering the interests of the Cuban military’s monopoly in business.
This policy would empower private Cuban entrepreneurs by eliminating their dependence on the Cuban state apparatus and open them up to U.S. leadership and influence in the region. Private success over public ventures would speak volumes in favor of new economic and social thinking.
As a first measure, restoring the capacity for U.S. citizens to schedule individual visits to Cuba, which was eliminated in 2017, should be considered.
The potential economic boon for Cuba’s tourist industry could eventually stimulate growth in both the U.S. and Cuban economies. Also, this measure would promote democratization and bolster innovation and an entrepreneurial spirit in Cuba.
The recent promising developments in the Korean Peninsula indicate that diplomacy rather than deterrence can advance American interests in places where ideological and strategic divisions run deep. As the White House approaches a deal in East Asia, it could apply the lessons learned from the North Korean negotiations closer to home in Cuba.
President Trump’s acumen for dealmaking can face an ultimate test in Cuba. Opening conversations — and trade — with the island could mark a vast improvement in the bilateral relationship. Hopefully, the American people can look forward to the use of politics that shapes a future good for all of us.
Michael Czinkota teaches international business and trade at Georgetown University’s McDonough School of Business and the University of Kent.
Lisa Burgoa of the School of Foreign Service contributed to this commentary.
Here is my televised discussion with China Global Television Network’s Elaine Reyes on the possible outcomes for the US-China trade deal, following the agreement on Saturday. Enjoy!