rotmanmagazine.ca / 105pense budgets. However, when they pitch the longer-term
capital requirements to access internal pools of capital, we
have seen them thwarted time and time again by otherwise
typical features of many socially-responsible investments:
complexity, long-term payoff, and modest or moderate fi-
nancial returns. In other words, these initiatives often fail
the test for internal capital allocation.
Some companies simply do it anyway, typically with the
leadership of key executives. For instance, Walmart’s lead-
ership invested in a massive sustainable supply-chain man-
agement initiative that has had global reach and helped it
manage risks and establish a new narrative with consumers;
and under Paul Polman, Unilever repositioned itself as ‘the
sustainable living company’ and consistently outperformed
its rivals in the public markets for more than 10 years.
But in the absence of such clear executive commitment,
how can sustainability professionals get further down this
road? How can we fund projects with long(er) time horizons
and lower rates of return but also with important long-term
payoffs for the company and the world? How can we better
leverage the capital markets and the finance capabilities of
our companies in support of social, environmental — and
business — benefits?FOR YEARS, sustainability professionals —
and the academics who study their work
— have been answering some tough ques-
tions. Is there a business case? (Yes). Can
we determine which social and environ-
mental issues are most important to our
business? (Yes). Is it possible to measure and report on sus-
tainability practices credibly? (Yes). Can we deliver value to
business and society? (Yes). Simply put, the evidence shows
that companies generally perform better if they’re more sus-
tainable.
However, despite this progress, many sustainability
professionals still struggle to access budgets internally — in
particular, long-term funding for big, multi-year projects.
The fact is that they may know where they want to go, but
they’re short on capital — the fuel needed to achieve greater
social and environmental benefit.
In our research and consulting work at the Lee-Chin
Institute and through our networks, we have seen a number
of major corporations develop a bold sustainability strategy,
map out breakthrough programming to support it, and gain
support for the intent of the project and its initial costs —
often from annual philanthropy, sponsorship or other ex-
Financing
Sustainability:
A Market Emerges
POINT OF VIEW Rod Lohin, Lee-Chin Institute for Corporate Citizenship, Rotman School of Management