Investments and financial portfolios are driving much of the global economy. Financial investments can be a bridge for change.  The reason: money. Money, cash is power. It is fascinating to follow the shifting focus of investment. Huge investment funds can shift priorities and influence corporate strategy. Investment funds, pension funds, like the California Public Employees’ Retirement System, have the power (money) to influence corporate focus on sustainability issues, on climate change, on social progress and governance. Money is power.

With this in mind, think of some of the changes that have occurred in our world over the last 150 years. First, 150 years ago we had a population of about 1.2 billion people here on earth. Second, consumption of natural resources wasn’t a worry. We had plenty. We didn’t worry about global warming and fresh water and the loss of biodiversity. We didn’t think about waste. We didn’t have pollution. Everything was in balance. We had harmony.

Fast forward to 2021. Our global population has grown to 7.5 billion. We worry about food and water supply. We are concerned about contamination in both. We worry about global warming and deforestation. When we measure “waste,” the volumes going to landfill and incineration are staggering. Political debate on the environment is constant. Raw material shortages and the availability of clean, fresh water are driving issues. 

The same space, Earth, has become overwhelmed by the challenges. Science and conservation – and non-profits – are reporting our world is out of balance. Experts are telling us we must develop practices and make changes that will bring us back to harmony.

It is my belief that investments, money, can bring about change. Investment funds can influence corporate, even government, policy. Now, more than ever, we need this power to influence our habits, not just in consumer-based manufacturing but our practices and habits at home. With a world population forecast to grow to nine billion by the end of the century, we need investment – investors and money – to help us change the habits of the “throw away” culture, to bring us back into balance.

The “chain of cause” is really complicated, and I want to look at two examples where change is slowly occurring because of money power.

In this column, I will focus on deforestation. In my next column, I’m going to explain how investments influence EPR (Extended Producer Responsibility).

Much of deforestation is commodity-driven, especially in Central America, Africa and Southeast Asia. The loss of tropical forests has accelerated as the demand for soy, palm oil and beef has grown. The demand for paper products, such as toweling, tissue and toilet paper, is driving deforestation, as well. Interestingly, most of us understand deforestation is a serious issue, but many don’t understand the corporate connections behind it. Corporate brands don’t operate the bulldozers or burn the forests, but they have created the demand.

Palm oil, and I’ve written about this several times, is a good example:
Plantations run by palm oil suppliers in Southeast Asia and Africa have decimated tropical forests and destroyed animal habitats. Palm-growing operations have also driven indigenous people off their land and used forced and child labor.

At source, the raw material has many attributes linked to its impact on people and ecosystems.  But once it enters the global supply chain, it’s a commodity and virtually untraceable, presenting a huge challenge for companies at the top of the supply chain and for their investors. (Morning Star)

And as we dig deeper into the supply chain we find:
This can be the case for companies based both inside and outside the regions in question. For example, US-based agriculture company Archer-Daniels Midland (ADM) is an S&P 500 index fund holding and is held in funds run by American Funds and Wellington Capital Management.

According to Sustainalytics, multiple observers “have highlighted deforestation in ADM’s palm oil supply chain, and a number of ADM’s suppliers (either direct or indirect) have been named in reports related to deforestation, habitat destruction, and peatland clearing and fires in Indonesia, Malaysia and Papua New Guinea.” In addition, “ADM has been accused…of purchasing soybeans from unregistered farms located in the Amazon, and…being exposed to fires in the Brazilian supply chains.  The company’s deforestation policy is considered weak and lacking in commitments.” (Morning Star)

The “chain of cause” continues as there are many large organizations that are consuming goods produced on deforested land, knowingly or unknowingly. Companies that we know include name brands like Domino’s Pizza and Yum Brands, which owns KFC, Pizza Hut and Taco Bell.

Proctor & Gamble has also been a target of investment funds because they are sourcing commodities from enterprises that are linked to tropical forests in Southeast Asia via personal care products where deforestation is occurring. My own personal observation of P&G is their refusal to use secondary fiber in their toweling and toilet paper products. This has never made any sense to me. Why not support reuse and recycle, and help reduce waste to landfill by repulping secondary instead of using 100% virgin pulp? But this is another issue for another time.

Investors and investment funds are increasingly following stewardship and sustainable certification. These “money people” are pushing companies to commit to sourcing from suppliers that have obtained third-party certifications.

There are specific investment funds that focus on ESG (Environmental, Social, & Governance) issues. Green Century is one of these. It was founded 30 years ago by a group of environmental and public health nonprofits. It is a unique asset management fund. All profits go to supporting the environmental and public health of its non-profit owners. For example, in the case of deforestation, Green Century makes sure that companies follow through their chain of custody policies. 

In 2014, Green Century was instrumental in pushing Kellogg to source 100% deforestation-free palm oil. Green Century achieved success by facilitating an agreement between Kellogg and their primary palm oil supplier, Wilmar, to source palm oil from non-deforested land. The point: money talks.

In my next column, I will explain why EPR is supported by investment and is necessary to help us return to a balanced environment.

Another Letter from the Earth.


Calvin Frost is chairman of Channeled Resources Group, headquartered in Chicago, the parent company of Maratech International and GMC Coating. His email address is
[email protected].