Sustainability about people and enterprises, not metrics

At Stewart Investors, we believe the true drivers of sustainable development are to be found in people and enterprises, not sustainability metrics.

Take soy milk company Vitasoy as an example.

Vitasoy is stewarded by the Lo family. The founder Dr. KS Lo sold soy milk door-to-door as a low cost source of protein from 1940 - a time of food shortages and malnutrition in Hong Kong. Over the eight decades since, the company has been managed with competence, humility and integrity, and now provides healthy dairy alternatives in 40 countries.

What Dr. Lo didn’t know back in 1940, was that plant-based proteins like soy milk would one day be vital for managing a different crisis - climate change. Soy results in less than a third of the greenhouse gas emissions of dairy milk, along with a fraction of the land and water use. However, while Vitasoy’s business drives an important climate change solution – plant-rich diets - it is often not categorised as a ‘climate solutions company’ by sustainability researchers. 

It is stories like Vitasoy’s which show the limitations of top-down, narrowly focused efforts at aggregating sustainability metrics. While we could develop portfolio level metrics and elaborate calculators, which aggregate and quantify the contributions the companies we invest in are making to sustainable development, such an approach would always be heavily laden with assumptions and be driven by abstraction. Has my investment really resulted in 1,000 cars worth of emissions being taken off the road?

It would also fail to capture the central role the leaders and employees of the companies we invest in play in achieving these outcomes, which also happens to be the question we focus on more than any other – can we trust the stewards of this company to do the right thing with our clients’ capital?

We couldn’t guess at how much less ruminant emissions will be from the growth of soy milk vs dairy in one scenario vs another, or the number of hectares of forest that will be saved thanks to Vitasoy’s plant-based milk sales, but we know the potential is huge. Like ‘colour by numbers’, sustainability by numbers forces investors to stay within the lines. This results in the deep interconnections between social and environmental issues being missed, even though we believe, this is where some of the best opportunities that sustainable investment has to offer lie.

As long-term equity investors, our focus is on understanding the contributions individual companies make to sustainable development from the bottom-up. This holistic view of sustainable development allows us to better appreciate the many ways businesses can and are contributing to a better future.

We also believe that by sharing the stories of every company we invest in, and connecting them to the products and services we consume in our everyday lives, we can better illustrate the many ways these businesses are making the world a better place for people and planet. You can discover these companies for yourself by visiting our Portfolio Explorer tool.


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