Five Questions about SRI – Weekly Expert Interview with Stuart M. Williams, Principal, Plan C3, LLC, Kiawah Island, South Carolina, United States of America – July 12, 2013

Each week Emerging Markets ESG publishes an interview entitled, “Five Questions about SRI.”  The interview features a practitioner’s insights about SRI in emerging markets and through Emerging Markets ESG shares this expertise with a wide global audience.  The goals of Five Questions about SRI are fourfold:

  • To collect a catalogue of examples of SRI in practice in emerging markets;
  • To raise awareness about SRI in emerging markets;
  • To reflect on what SRI in emerging markets means to practitioners; and
  • To enable SRI practitioners in emerging markets to network with peers around the world.

This week’s interview is with Stuart M. Williams, Stakeholder, Plan C3, LLC, Kiawah Island, South Carolina, United States of America.

The overriding philosophy of Plan C3, LLC is to support its corporate, government and private clients as they work to save a planet at risk of dying from human consumption by redefining:  the planet as the world’s largest provider of the things we need as opposed to want, i.e., making the environment a stakeholder in everything we do; corporate stakeholders, as they cannot just be human (individual or institutional) investors anymore; today’s commonly accepted notion of profit and value creation in order to satisfy all stakeholders; consumer consumption from want to need based; investing, savings, and charitable donations by proving that investing in securities of sustainable companies results in sustainable conservation while matching or beating market benchmarks; how emerging markets build their economies using sustainability as the foundation; the traditional career paths for 17 to 24 year olds while embedding sustainability practices within their curriculum; and financial literacy across America.  Currently, Plan 3C, LLC is engaged in efforts to embed sustainability in the emerging economies of Ecuador and Paraguay.

Stuart M. Williams is Principal of Plan C3, LLC.  In 1992 he was lucky enough to become the Co-Founder of The Strategic Research Institute (SRI). From February 1993 through June 2006, Stuart (as the Co-Founder, President & CEO) built SRI into one of the world’s leading conference companies, holding more than 1,500 global executive symposiums that attracted more than 300,000 C-Level executives as attendees, 2,000 companies as sponsor and exhibitors, and over 40,000 key industry leaders as speakers. Stuart also guided the company through an economic downturn in 1997 and the terrorist attacks of 9/11, during which time he had to run a business that was totally dependent upon people’s willingness and ability to travel. Stuart’s business acumen and the quality of his leadership resulted in a record year for the firm in 2002. Additionally, Stuart led SRI to be one of the very first privately held US companies to hold Executive Level Conferences in China.  After the successful sale of SRI to a Bruce Wasserstein backed private equity fund in 2006 and his subsequent tenure as a member of the five-person Executive Management Team of ALM that guided the auction sale of the company to a British backed media company funded by Apax Partners, Stuart took a year’s sabbatical to focus on charitable work.  Step one was working for Habitat for Humanity building houses for the victims of Katrina in New Orleans, step two was the realization that he was useless at building houses which turned into step three, helping Katrina victims manage their consumer debt. In embracing the latter, Stuart saw first-hand the effects of predatory lending and has since worked diligently with regulatory bodies and state senators to put in place a mandate that will improve financial literacy across America.

Emerging Markets ESG:  How would you define socially responsible investment (SRI)?

stuart1Stuart M. Williams:  To us, SRI occurs when an investor (institutional or individual) takes into consideration the effect the investment will have on all stakeholders involved in the company or asset being invested in. Until very recently, stakeholders were mostly defined as either institutional or individual financial shareholders and hence companies defined their profit and value creation goals to be aligned with the investment needs of those shareholders. Today, great strides are being made to redefine who and what stakeholders are, e.g., employees, communities, the environment, vendors, clients/customers, supply chains etc., and with this redefinition comes the ability to redefine profit and value creation to be aligned with all stakeholders.  In summary, we would define SRI as the desire to invest in a company or asset that has redefined who and what its stakeholders are so that it can then redefine its profit and value creation goals to be aligned with all stakeholders.

Emerging Markets ESG:  What distinguishes SRI from mainstream investment? 

Stuart M. Williams:  The ability to align profit and value creation goals to be aligned with all stakeholders, (no matter who or what they are) not just financial “shareholders.”

Emerging Markets ESG:  Which extra-financial theme – environmental, social or governance – is the most challenging for companies in Paraguay to manage?

Stuart M. Williams:  Paraguay is like many emerging economies in that it needs to redress the in-balance caused by two centuries of environmental and humanitarian inequalities. Social change takes a generation to take effect and it takes a brave group of leaders (government and private sector) to be the catalysts for altering the status quo.  Social change is the most difficult because those with expectations of “it’s my turn” will often be anti-change, and hence a balance is required between a top down and bottom up approach to achieving the goal of building an emerging economy on the principals of sustainability and conservation. What works in our favor is that many global investors, countries and corporations are now using sustainability (SRI or impact investing) screens to make investment decisions, so if an emerging market wishes to join the global business community it will have to start to comply with all areas of an investor’s diligence process.

It is a truism that a rising tide lifts all boats, but it is very easy to lifts the boats when the tide rolls in.  Success, however, will only be measured upon how may are kept up when the tide rolls out again. ESG in emerging markets must ensure that all citizens of an emerging economy benefit from the inflow of capital the country will receive, and it is working with companies to embed that social paradigm shift that is the biggest challenge.

Emerging Markets ESG:  Which extra-financial theme – environmental, social or governance – is the most challenging for investors in Paraguayan companies to analyze?

Stuart M. Williams: Transparency is the biggest issue, which leads to difficulties in analysing governance and sustainability efforts. Additionally the ability to perfect security interests in investments has been a major area of concern for investors interested in Paraguay.  However, Paraguay’s government and private sector leaders fully understand that if they wish to attract global capital they must become more transparent and also comply with evolving diligence mandates, which more and more are including SRI related screens.

This change in investing methodology being embraced by countries, global corporations, and investors is having the desired effect, as it is mandating that Paraguay’s government and business leaders focus on redressing the in-balance of past environmental and humanitarian inequalities. To prove its point, at least three of Paraguay’s leading companies (one that was built by the country’s President Elect) are embracing sustainability programs from the top down and bottom up, which is a wonderful example to set for the rest of the country.

It is not enough to get government and private sector leaders to embrace and embed the practices required to promote sustainability (which includes transparency), and hence attract ESG focused capital.  One must also effect change in rule of law. Paraguay’s current leaders deserve a great deal of credit for being open to change and presenting its parliament with bills that will allow public-private partnerships (PPPs), the perfection of security interests, more rigid governance and better transparency etc.  Additionally, Paraguay is turning away companies that it believes are coming to simply pillage its resources, as it recently did to a huge multinational considering a $3 billion investment in a smelting plant.

Paraguay’s leaders are working hard to show investors that the perception of the country is not today’s reality, however, there is work still to be done and investors should make sure to include local partners and have local representation from firms such as Guarani International Advisors.

Emerging Markets ESG:  How can sustainable investment – (socially) responsible investment that considers environmental, social and governance (ESG) impacts and risks – promote sustainable conservation?

Stuart M. Williams:  We are facing the existential crisis of the extinction of the human race because without an environment and everything it provides, there will be no people. The higher the number of people consuming at the table we call Planet Earth, the faster we have to change the menu — and it is for this reason that we must make the environment a stakeholder in everything we do.

Linking what we call sustainable investing (SRI, ESG, impact investing etc.) to sustainable conservation is an imperative that if ignored, or we fail at, will result in the menu we currently consume from having nothing left on it.

In the US, 98% of all charitable giving goes to humanitarian efforts, which of course are also imperatives, but the 2% that goes to the environment is not enough. We need to build a sustainable investing focused consumer revolution where those of us with a choice vote with our capital and lifestyles. Over the next 20 years Plan C3 will work to get 100,000,000 people (1.4% of the current population) to invest $2,400 per annum of their retirement and general savings in SRI focused investments while donating $500 to environment focused charitable organizations. Sustainable investing will absolutely help change the menu currently being taken from Planet Earth and hence promote sustainable conservation. However, that will not be enough as we also must work with corporations to help them become better stewards of our planet, while at the same time working hard as individuals to make the personal spaces we live in more sustainable than they were when we inherited them. There will of course be companies that will not listen to reason, but they will listen to the sound of the door slamming behind consumers, clients and investors as they leave.

We are running out of resources so we must make conservation of our environment sustainable.  Governments have already set precedents during war times with rationing mandates.  If we do not conserve what we have, future wars will eventually be fought over resources we currently take for granted, and rationing will be ubiquitous. Is that what we really want for the future generations of our families?