Big Issue Invest

It is One World. Why environmental, social and governance issues work best together.

By Danyal Sattar, CEO of Big Issue Invest

In my Tai Chi practice, we start the Tai Chi Form, the series of 37 moves that make up the seven-minute short form sequence, with something not immediately obvious from the outside.

The movement where we stand before starting the form, is a moment of undifferentiated stillness. The first shift of the weight, from one leg to another, for the first step, initiates and recognises the distinction of the Yin from the Yang.

Yin energy represents the more inward, Yang the more outward. Yin is winter — building up your reserves. Yang is summer — bursting out with life. Each movement has a different emphasis and typically shifts into yin and out through yang. This flowing sequence of moves is unified, but constantly distinguishing between these elements. You could not say “Tai Chi is Yin” or “Tai Chi is Yang.” It is both, unified but clearly distinguished.

That is why the separation of environmental issues from social ones has never made sense to me. They are together, always. Sometimes you have more of one and more of another, but they are a unified whole.

If you think they are separate, try this simple thing. Hold your breath. See how long you last without breathing. That’s how long you can be separated from your environment as a human being. You breathe the air. You drink the water. You eat the plants. Swim in the sea. Similarly, every economic activity we have, is as dependent on the environment as we are. Operate a factory without land for it to sit on, or a building to encompass it? Burn coal without the oxygen from the atmosphere? Have a solar panel without silicon? Run agriculture without the sunshine on the land, or the rain from the sky?

Part of what we do in our Tai Chi, is to unify ourselves as human being. If that sounds a bit metaphysical, well, it’s bending your knees a bit, which means your legs get a bit of exercise and moving around, so every muscle and joint in your body gets a bit of movement. Focusing on moving your arms and legs to the positions in the form, distracts your mind from the everyday challenges you face day to day. You finish in better shape than you came out.

Environmental and social issues in investment are intertwined. If you’ve got a concern for human wellbeing, look at the mortality rate for air pollution. Clean water, alongside vaccination, are the two most important elements of public health. The simple physical nature of our interaction as human beings with the planet establishes that, let alone the mental health benefits of the natural environment on our wellbeing.

In social justice terms, the poor suffer the most from environmental degradation, be it internationally or right here in the UK. People on lower incomes are most exposed to air pollution, living next to congested roads and to flooding. Flood vulnerability is a classic — if you take a purely economic approach to flooding, you tend to spend money on reducing flooding in areas that are richer rather than poorer. Each pound of economic spend on flood reduction protects more pounds of investment. Seeing flooding through a lens of social justice changes your perspective both on how the current system is working and how it might work in the future.

What does this mean for us as investors? As an investor, the best thing you can do is perceive reality as clearly as possible. Every trend, fashion or bubble in investment, takes you away from what is real. In real life, we are utterly connected to our environment. Our economy is too. So should our investments, in supporting that.

Here are three straightforward things we can do, together.

First, align regulation through good governance. We operate within a set of rules and constraints as a society, to balance competing interests. By recognising environmental and social issues as aligned, we can put in place the planning frameworks that let us benefit from this alignment. A well- insulated home adds a marginal cost to building it, but saves money during the course of its lifetime. Less CO2 = £ saved, particularly important in an economy where real incomes have not significantly increased since the global financial crisis coming on to a decade and a half ago.

Second, as investors, we should demand the same focus on social issues as environmental ones. Concerned about gender equality? Ask for investment criteria about equal board representation. Concerned about declining standards of living and a hollowed-out middle class? Invest in companies paying the living wage as defined by the Living Wage Foundation.

Third, good governance is good for all of us. It must be meaningfully good governance. It may not be what conventional corporate governance codes ask for, but opportunities for employees to meaningfully engage with their companies, trade unions, and employee ownership and representation have a direct connection to social and environmental issues. Increasingly, people seek meaning and fulfilment through their work and would like companies that reflect their values.

The value of separation is that each of these issues requires careful, skillful application. The value of unity is reinforcing each other. By understanding the interconnected nature of all three — environmental, social and governance, we can achieve them all, together.

Danyal Sattar is CEO of Big Issue Invest and teaches with the School of Tai Chi Chuan London https://www.londontaichi.org

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