It Ain’t Easy Going Green — The Loop

Good morning.

Two months ago, the 181 members of the Business Roundtable set a course towards sustainability by signing a pledge that redefined corporate responsibility as an obligation not only to shareholders but to stakeholders across society.

“It was long overdue for the Business Roundtable and every company to realize that that is the purpose of business,” says CB Bhattacharya, H.J. Zoffer Chair in Sustainability and Ethics and Professor of Marketing and Management at the University of Pittsburgh.

However, sustainable change is easier said than done and in his new book, Small Actions, Big Difference, CB argues companies tend to fail on the implementing sustainable strategies regardless of how sincere they are in their desire to do so.

According to CB, that shortcoming occurs either because bosses delegate the task to a single unit rather than integrating sustainability with their corporate strategy, or because boards believe unsustainable practices can be solved by a change in management.

“Corporations love a change in management but what that ignores is that sustainability fundamentally has to go back to the purpose of business, “CB says, adding that it’s the responsibility of a CEO to ensure that sustainability is mainstreamed in the company’s mission statement — reminding me of Bill McDonough’s quip at the Global Sustainability Forum that the CEO is the real CSO.

The purpose of putting sustainability up front, CB argues, is that it allows stakeholders such as employees to take “psychological ownership” of the company and its work. This sort of ownership — which amounts to an onboarding of moral responsibility and helps stakeholders align the company’s successes with their own sense of well-being — differs from the literal ownership of a company.

“I would not try to apply my model of psychological ownership to shareholders themselves,” CB says, but that’s not to say literal ownership, and the financial that goes with it, is without influence. So-called “green financing,” though small as a percentage of overall corporate investment, is a fast-growing segment.

Just last week the International Finance Corporation — which organizes of the Sustainable Bond Forum — announced that global “green debt” issuances have passed the $1 trillion mark. Meanwhile, here at Fortune, our Future 50 list — which tips 50 public companies for long-term above market returns — included a subsection for the top 10 “Sustainability All Stars”.

However, CB doesn’t think companies should wait for investors to get on board before making the switch to sustainable practices, citing Unilever as an example. The consumer goods giant stopped reporting quarterly earnings in 2009 because then CEO Paul Polman determined the mechanism was antithetical to long term growth.

That decision lost Unilever a slew of investors but, as Polman’s thesis proved true, the company acquired a new gang of long-term investors and, since 2009, shares of the Dutch-British corporation have trended up some 150%.

“Sustainable investment takes time to pay off. You will have to spend money to get your house in order,” CB says. “But once the return starts coming in then there is no conflict between sustainability and profitability. There are many ways your money comes back to you.”

More below.

Eamon Barrett
– Eamon.Barrett@Fortune.com

Carbon Copy

Electric Avenue. Over the last week or so, U.K. vacuum maker Dyson announced it had pulled the plug on its electric vehicle project because the car it had designed was too costly. The hypothetical car would have likely cost more than the $170,000 price tag on the —at this stage, also hypothetical — FFXX from Faraday Future, a California-based EV maker whose founder declared bankruptcy on October 15. In the deluge of all these broken pipe dreams, Andrew Moseman asks, where are the boring EVs? The ones that put function, and price, before form. Fortune

Highway man. Sticking with cars for a moment: to mark the roll out of its first all-electric vehicle — and to boost sales ­— Volvo is offering to cover the cost of charging any of the EVs under its new Recharge line for a year, starting with the 2021 model. The incentive could encourage owners of Volvo’s hybrid models to rely more on the motor and less on the engine. Bloomberg

Blue steel. China’s top aluminum manufacturer, Hongqiao, is establishing an industrial park in southwestern Yunnan province to develop “green aluminum.” The factory will “green” aluminum by incorporating hydropower, which Yunnan has an abundance of. Yunnan province has been flexing its environmental credentials recently — it hosts Fortune’s Sustainability Forum; next year it will host the Conference of the Parties (COP) on biodiversity — and major aluminum manufacturers besides Hongqiao are looking to take advantage of the region’s hydropower. Reuters            

A new leaf. Scientists at Cambridge University have developed an “artificial leaf” that can produce a “clean” alternative to synthetic gas. So-called syngas is typically made from fossil fuels and is used to manufacture a myriad of daily products. The artificial leaf produces syngas through photosynthesis, using only sunlight, water and carbon dioxide. “Being able to produce it sustainably would be a critical step in closing the global carbon cycle and establishing a sustainable chemical and fuel industry," the report’s lead author said. Science Daily

In The Loop

End Economic Short-Termism by Keeping Score by Klaus Schwab

Norway Is a Green Leader. It’s Also Drilling More Oil Wells Than Ever by Katherine Dunn

Why Women Continue to Lose in the Financial Services Industry and How We Can Fix It by Sallie Krawcheck

The World Bank and Its Peers Get Poor Marks for Funding Renewable Energy Projects by Eric J. Lyman

Plunging Costs Make Solar the Renewables Leader as World Struggles to Meet Paris Accord by Katherine Dunn

Closing Number

8%

Arguably 2019 has been the year of plant-based meats. Beyond Meat scored a whopping $1.5 billion valuation in its IPO and major meat processors, such as Tyson Foods and Smithfield Foods, are now churning out meat-free alternatives. Our global interest in meat-free-meat comes none too soon as, according to Euromonitor International, global meat consumption rose by nearly 8% between 2013 and 2018 with sales piling on close to 18 million tons. The majority of that surge is due to consumption topping up in developing nations, but whether processed plant proteins can provide a healthy diet for the new consumers is up for debate.

This edition of The Loop was edited by Eamon Barrett. Find previous editions here, and sign up for other Fortune newsletters here.