Image Caption: Niall Carroll, Chairman of CG Tech, is helping overturn long-held beliefs about shareholder primacy, with a winning formula placing people and planet before profit.
Today’s leaders are taking stock and rethinking how they want to do business. Spurred on by challenges including climate change, the COVID-19 pandemic and the soaring cost of living, impact or ESG (Environmental, Social and Governance) investments are gaining traction and procuring allies in both government and businesses alike.
According to a December 2021 article in Reuters, “a record $649 billion [was] poured into ESG-focused funds worldwide through Nov. 30 [2021], up from the $542 billion and $285 billion that flowed into these funds in 2020 and 2019, respectively.”
With words like ‘sustainability’ and ‘community’ increasingly cropping up in all aspects of our lives, the logistics of integrating these concepts into rigorous investment criteria isn’t always clear. For many businesses, historical concepts around shareholder primacy continue to muddy the waters.
In the United Kingdom, one campaign is hoping to change this. The UK Better Business Act is a proposed amendment to section 172 of the Companies Act and would ensure all businesses align their interests with those of wider society and the environment. Through their research, betterbusinessact.org found that 76 percent of voters and consumers in the UK want businesses to be legally responsible for their impact on the environment and broader community.
An investor who has been quietly championing the idea of sustainable venture capitalism for well over a decade is Niall Carroll, the Chairman of CG Tech, an investment holding company with global interests in a variety of traditional industries. Carroll has made a successful career out of purpose-driven investment. Taking the lessons learned during his time in investment banking as well as running Royal Bafokeng Holdings, a community-owned investment company for the Royal Bafokeng Nation, Carroll established CG Tech in 2015 with business partner Andrew Jackson. The goal? Investment with purpose.
The group operates with a unique approach to investing. Acquiring businesses that on paper don’t seem to match up, but through the use of disruptive technologies, all form a larger ecosystem in which success for one company equals success for them all. For Niall Carroll and his partners, the objective is all about building something that will have an enduring impact and less about investing in the next unicorn.
It’s a position close to what those supporting the Better Business Act are hoping to make a standard for companies and leaders in the future. The amendment has the backing of more than 1,000 UK businesses and a number of high-profile CEOs including Douglas Lamont of Innocent and Mary Portas, a retail consultant, broadcaster and Co-Chair of the Better Business Act campaign.
Speaking at the Women of the World Festival back in March, Portas said, “We have to unlearn all that we have learnt in business. Here’s the thing. The world isn’t filled with bad people doing bad things. It’s filled with mainly good people misguided under the sway of bad ideas. People are incentivised badly. Growth and profit needs to be replaced with People. Planet. Profit. In that order.”
Placing people before profits is something Niall Carroll strongly believes in. During his time at Royal Bafokeng Holdings, Carroll’s visions on the importance of community and culture were clearly shaped. In 2007, Carroll found himself brokering a deal between the Royal Bafokeng Nation and Impala Platinum, an arrangement that was decades in the making and saw RBH become the single largest shareholder in the world’s second-largest platinum producer. Carroll recalls that there were resentments on both sides, but by coming together and ensuring that a fair deal was agreed for all parties, common goals were established and an ability to work together was created. The irony? Outdated notions of shareholder primacy be damned. As it turned out, profit and positive impact were not mutually exclusive.
It’s a blueprint for sustainability that Niall Carroll continues today. The CG Tech motto Serve. Solve. Uplift. weaves its way throughout the group’s portfolio. Carroll believes that a culture steeped in community and one that looks after the overall health of their ecosystem is also better prepared when times of crisis hit.
The book, “Making Money Moral: How a New Wave of Visionaries is Linking Purpose and Profit,” by Judith Rodin, the former president of the Rockefeller Foundation, and Saadia Madsbjerg, former managing director of the Rockefeller Foundation, discusses how the shareholder-first approach to investing has affected society over the years. The book, a decade in the making, seeks to re-imagine capitalism where impact investing reigns supreme.
In an interview with McKinsey, Madsbjerg explained that, “Since the 1970s, we have followed a shareholder primacy mantra, where our focus has been on short-term profits.” Adding, “we haven’t looked at the environmental impact of the way we have run our businesses and the way we have made our investments. We now know that what we do in business has a strong impact on society, and the other way around as well. So the argument for rethinking how to invest isn’t an ethical one. It really has to do with creating long-term value for not only our portfolios, but also for society.”
The book goes on to list a number of businesses and leaders already employing sustainable investment strategies, including DreamBox Learning, Goodlife Pharmacies, GPIF and The Nature Conservancy. Much like CG Tech, these companies and nonprofits are steadfast in their long-term goals, repurposing business models and driving transformational change to ensure not only returns on investments, but also positive impact on the environment and societies in which they operate. Goals that the people behind the Better Business Act hope to make law, not optional.
