Companies that include sustainable strategies are the most highly valued by the market

Hear this and other conversations on our Podcast: Positive Impact.

In our podcast Positive Impact, we had the opportunity to talk with Jaime Silos (deputy director of Forética and former president of Spainsif) about the keys that make companies leaders in sustainability, understand where big investors are putting the focus and which are the sectors with the highest impact initiatives in sustainability.

Silos clearly sees sustainability as a business opportunity "at a time of increased systemic vulnerability, marked not by one, but by two crises that have hit us over the last 12 years".  For Silos, the economy has been hit by the impacts of a strictly financial crisis and a second one with a health component, that of Covid19. 

What role do social and environmental aspects play for companies in generating value? 

A company creates sustainability in the same way it creates value with any other business initiative. Silos highlights four aspects to assess: 

• A company that is capable of solving major problems. "If a company has a human criterion at the level of sustainability, it will have practically infinite growth prospects."  Silos affirms that we are seeing it now, for example, with vaccines "whoever has the vaccine, has the solution therefore, its capacity to grow on that solution is infinite." 

• If a company keeps its brand aligned with the interests and needs, even with the fears of the user, it becomes a meaningful brand, which connects emotionally with the subject. They have a higher value in the market and we have evidence that indeed companies with better sustainability performance have higher gross margins. 

• Economy of resources, i.e. efficiency. This criterion is closely related to the environmental part because if a company is able to produce more goods and services with fewer resources, it will increase the expansion of its margins. 

• Human capital, employees are very sensitive to the sense of purpose of organizations, so if an employee believes in what his or her company does, motivation will go beyond making money. This allows companies to better access talent. 

Which sectors are most attractive to investors? 

Large investors, by definition, have to be diversified. So they are exposed even to those sectors that have a greater environmental or social impact. Thematic investing in sustainability is extensive and there is an infinite level of sophistication, so really what investors are betting on is the companies that are leading sustainable strategies rather than a particular sector. Silos provides several examples: 

• There are more and more ETFs (Exchange Trade Fund) or exchange-traded funds. It is a product that also bets on the gender struggle and invests in companies that make a greater push for the empowerment of women. 

• Energy transition funds that invest in renewable energies. 

• Other funds are committed to the protection of human rights. 

• MSI CI, Country World Index Sustainable Impact, lists companies whose business model is more than 50% dependent on providing solutions to the Sustainable Development Goals, pushing companies to pursue an SDG agenda 21.