The Forgotten Letters — S & G

When it comes to sustainable investing, three factors are typically used as measurements: social, environmental, and governance. For most of us, the benefit to reducing our environmental impact is obvious. The importance of governance has also been well researched by S&P Dow Jones Indices—just look at the S&P LTVC Global Index.

The social factor, however, has been less examined. Social refers to mentalities in the workplace (e.g., diversity management, human rights, etc.), as well as any relationships surrounding the community (e.g., corporate citizenship and philanthropy). It includes criteria such as human capital development, corporate citizenship, and occupational health and safety.

This “S” factor has become increasingly relevant to market participants. In January 2016, the U.N. set the Sustainable Development Goals (SDGs)—17 goals with the ultimate purpose to “end poverty, protect the planet, and ensure prosperity for all.”

The We Co.'s planned initial public offering, once expected to be among the largest this year, is on hold until further notice, and some are questioning whether it will come to market at all.

Much of the hype surrounding the WeWork Cos. Inc. parent's public debut has fizzled. In an effort to stem the tide of negative sentiment around the company's unusual corporate governance structure, WeWork's board this week pushed co-founder and Chairman Adam Neumann out of the CEO seat. The flare-up has reportedly even singed JPMorgan Chase & Co., Goldman Sachs Group Inc. and other advisers to the company, who face potential reputational fallout for having pushed an estimated valuation of $47 billion or more with the offering. Critics say the company is worth only a third of that, at the high end.

Sustainability-focused groups are calling on the CEOs of major U.S. corporations who make up the Business Roundtable to act on their recent declaration that the companies should concentrate on providing benefits to all stakeholders rather than primarily on deriving profits for shareholders.

About 180 of the roundtable's member CEOs signed a letter in August expressing the view that the focus should be on overall benefits to customers, employees, suppliers and communities along with shareholders. The letter marked a major shift in the group's official position.

Walmart Inc.'s move to stop selling certain guns and ammunition could benefit the retailer as consumers and investors continue to seek out socially conscious companies, industry experts said.

The company announced on Sept. 3 that it will stop selling handgun and short-barrel rifle ammunition nationwide following deadly shootings at two of its stores, in addition to halting handgun sales in Alaska, the only state where Walmart sells the guns.

The retail giant's moves, which came after it received mounting pressure from its employees and the public to stop the sales of firearms, comes during the renewed debate on the issue of gun violence and could encourage other companies to engage in a public conversation about gun policy in the U.S., experts said.

The world's biggest food companies have long been criticized for failing to tackle the insidious problem of child labor in the $140 billion global chocolate market. Now the Netherlands, with a population of 17 million and a large cocoa footprint, is using a carrot-and-stick approach to spur faster change.

The Dutch effort partly relies on a tough new law that requires companies to identify and fix child labor problems in their global supply chains. It also harnesses the market power of local banks, asset managers and pension funds to increase the financial pressure on the cocoa industry. The effort is starting to pay off, as suppliers, manufacturers and supermarkets increasingly change the way they source, track and sell chocolate.