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Net positive impact

An icon of sustainable business has a new book. Paul Polman, the former CEO of Unilever, has co-authored, along with sustainability consultant Andrew Winston,Net Positive: How Courageous Companies Thrive by Giving More Than They Take.

In the introduction to the book, the authors explain that we are led down the wrong path if businesses are only focused on being “less bad”. Instead, the authors argue we need to flip the chart and draw the line up into positive territory. So, a safety metric would not only be about driving to zero incidents but going further and driving for a “health-producing workplace”. Or even further, such as contributing to customer or even societal health. With that framing in mind, the authors show their vision which is “a business that improves well-being for everyone it impacts and at all scales – every product, every operation, every region, and country, and for every stakeholder, including employees, suppliers, communities, customers, and even future generations…”

This is a vision we love and connect with because it is our vision too. In fact, we have been using the phrase net-positive impact at Honeytree since our inception. We invest in companies based on the strength of their governance and leadership, their commitment to innovation, consistent fundamentals, and a strategic focus on making a net positive impact on the world. We invest in companies who's bottom line is directly tied to the positive impact they make on their stakeholders.

What does this mean in practice? One of our companies is the Dutch multinational corporation, Koninklijke (Royal) DSM, active in the fields of health, nutrition, and until recently materials. One of its lines of business includes animal feed and additives. Here, the company has a notable initiative to address climate change, in particular methane produced by cows. It is a staggering statistic, that approximately 14% of global anthropogenic carbon emissions come from livestock. DSM has developed a feed additive for cows (and other ruminants) that suppresses the enzyme that triggers methane production in a cow’s rumen and reduces enteric (digestive) methane emission by approximately 30% for dairy cows and up to 90% for beef cows.

In addition to its effort to reduce the impact of methane from farmed animals, DSM is also working on and investing in meat culturing, a relatively polarizing but important activity. Cells are taken from animals, cultured, and then grown in a laboratory to form muscle tissue. It is still early days in this high-tech bio-science endeavor, but cultured meat has the potential to address the significant global environmental impact of meat production, animal welfare, and food security. We are already seeing cultured meat and seafood as retail products. Imagine fresh high-end sushi without the biodiversity destruction or transport?

Investors should also ask, does this vision of “net positive” all sound too perfect? This is something that is addressed in the book by Polman and Winston. They provide the example of Unilever building factories in areas of developing countries where access to clean technologies was not possible at the time, and had to run on coal or oil. The company was aware that this took a step back on the goal of renewable energy at the time, but it provided huge economic investment towards developing local economies. It is always a balancing act, and decision-making requires evaluating multiple needs.

But one thing is clear, investors need to go beyond considering companies that are merely minimizing their negative impacts. Companies of all sizes and all types make an impact - whether net positive or net negative. There is an imperative today, especially for large corporations and investors, to think harder about the positive impacts they can make.

[Image below is of a 100 year old hydro electric dam in Ontario, and the accompanying fish ladder for spawning fish to travel across the dam]


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