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The Three Ps Echo Across Wall Street
By Michael Schweibinz

Have you earned an MBA or degree in business administration sometime during the past half-century? If the so, you’ve surely had the four Ps of marketing engrained into your business DNA.

Marketers tend to focus on price, product, place, and promotion. Similarly, responsible investors make decisions based on people, planet, and profit. The three Ps that characterize a more responsible approach to investing consider the impacts that business decisions have on all stakeholder groups.

First Affirmative Financial Network, along with other responsible investors and investment professionals, have been promoting the three Ps for decades. And after years of diligent work, not only has the term caught on, but so too have the practices associated with it.

An increasing number of publications are shedding light on the notion that sustainability is good business. The myth that greening up a company’s business practices is inherently costly and will negatively impact the bottom-line is being replaced with a new reality.

“High sustainability companies significantly outperform their counterparts over the long term, both in terms of stock market as well as accounting performance,” according to a recent Harvard Business School study*. The International Finance Corporation has reiterated Harvard’s point by uncovering the fact that “the Dow Jones Sustainability Index performed an average of 36.1% better than the traditional Dow Jones Index over a period of five years*.”

While educational institutions have been endorsing sustainable, responsible, impact (SRI) investing for some time, Wall Street has typically been slower to implement more enlightened investment strategies; but not anymore. Major firms are now making adjustments in order to stay competitive.

“Leaders such as Accenture, Deloitte, McKinsey & Company, and PricewaterhouseCoopers have released data-driven case studies, global surveys, and exhaustive reports offering compelling proof that using business as a force for good is also good for business,” according to Ryan Honeyman in a FastCompany article.

Further, these major firms are reacting to consumer demand. They have seen an increasing number of investors seeking out investment vehicles that incorporate ESG and sustainability. Goldman Sachs has confirmed this trend with a recent report stating that “more capital is now focused on sustainable business models, and the market is rewarding leaders and new entrants in a way that could scarcely have been predicted even 15 years ago.”

Clearly, major corporations have, and are continuing to shift toward more enlightened business practices. McDonald’s, Dell, Coca-Cola, and Nike are among many working to set the standard—rather than having to play catch up down the road.

 

At First Affirmative, we understand that the ways we save, spend, and invest can dramatically influence both the fabric and consciousness of society. We believe that in addition to the benefits of ownership, investors bear responsibility for the impact our money has in the world. Are you making conscious decisions about the impact of your consumer purchase and investment decisions?

 

Mention of specific companies or securities should not be considered an endorsement or a recommendation to buy or sell that security.

 

*Past performance is no guarantee of future results.

Posted: October 13, 2014