Social - Needs more attention

There are huge pay gaps between the CEO, Management and employee, poor working conditions, modern slavery practices, gender diversity, and the shoddy way businesses treat their customers. Shockingly, we, the consumer, put up with this. Some companies see profit as the only measurement of success; The ESG train is a fast train that is bringing about change.

1/1/20236 min read

Social - Needs more attention.

There are huge pay gaps between the CEO, Management and employee, poor working conditions, modern slavery practices, gender diversity, and the shoddy way businesses treat their customers. Shockingly, we, the consumer, put up with this. Some companies see profit as the only measurement of success; The ESG train is a fast train that is bringing about change.

I previously wrote about how putting customers (and staff) first increases profits and the company’s value.

Companies need to give back to the countries and communities and communities that they have profited from (or exploited in the past). We have gaps between the rich and the poor, which are growing. Business leaders need to embrace these global challenges. This is not only about the Environment but world poverty and hunger. I ask how one drives around their Tesla, and not help the problem of world hunger.

I urge you to look at my blog – Global Hunger – The Gap

In this blog, I highlight the gap in which either one demands a revolutionary solution and another call shows simple solutions to tackle this global challenge. This involves not only treating your customers fairly but also your staff. By treating your staff fairly, you can increase productivity; by treating your customers better, you can increase sales. It is no secret that with all the growth in Innovation and Market Caps, most employees are underpaid and with no real change in the minimum wage. Income gaps and poverty continue to rise. So, how can this problem be improved?

Some ideas:

1. Companies should invest in the local areas where they do business, not just take but give.

2. Companies and their Boards need to consider the social impact of their Business.

3. Putting customers first - pays Dividends.

Companies need to make the customer journey easier by adopting user-friendly digital customer journeys, acting more fairly and transparently.

An important consideration is child labour treatment of workers in supply chains. In 2021, the US Bureau of International Affairs found that there were 146 goods made in 77 countries produced with the help of child labour, including products like coffee, produce, garments, and furniture, In addition, There are issues in shipping, mining , and the production of clothes

The International Labour Organization (ILO) estimates that the number of jobs linked with global supply chains in 40 countries increased from 296 million in 1995 to 453 million in 2013. This represents more than one-fifth of the global workforce. For many workers, jobs in global supply chains mean precarious work, low wages and inhuman working hours. The UN Guiding Principles make it clear that Multi-Nationals (MNCs) are responsible for working conditions in their supply chains. Yet many MNCs claim to have little control, or even knowledge, of how much workers are paid, the hours they work, their health and safety or their employment contracts.

But these same companies are able to make very specific production demands of their suppliers over what materials are used, where those materials come from, production processes, delivery times and so on.

Fair treatment of customers

We can take a leave out from the FCA, which regulates Financial companies “All firms must be able to show consistently that fair treatment of customers is at the heart of their business model. Above all, customers expect financial services and products that meet their needs from firms they trust. Consumer outcomes

There are six consumer outcomes that firms should strive to achieve to ensure fair treatment of customers. These remain core to what we expect of firms.

Outcome 1: Consumers can be confident they are dealing with firms where the fair treatment of customers is central to the corporate culture.

Outcome 2: Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.

Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.

Outcome 4: Where consumers receive advice, the advice is suitable and takes account of their circumstances.

Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.

Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint

What is interesting is that the FCA has published two Policy Statements confirming final rules and guidance to promote better climate-related financial disclosures. Better corporate disclosures will help inform market pricing and support business, risk and capital allocation decisions. And improved disclosures to clients and consumers will help them make more informed financial decisions. This, in turn, will strengthen competition in the interests of consumers, protecting them from buying unsuitable products and driving investment towards greener projects and activities.

Consumer & Customer Attitudes and Behaviour Sector

Consumer sentiment and preferences can change quickly due to raised awareness, e.g. response to plastics, and availability of other business models such as rental or shared ownership of items, e.g. car clubs. Consumer Behaviour: Changes could manifest in a reduction of overall demand, or moving to competitor equivalent or substitute products with lower environmental impact (e.g. electric cars). Investor Demands Green investors are challenging organisations and pushing them harder to be more environmentally responsible – and this trend is expected to increase. More institutional investors are challenging the long-term viability of products and business models. They expect more focus and diligence from executives, including scenario analysis and climate-related disclosure of Governance, Strategy, Risk Management, and Metrics and Targets (Source: TCFD). E.g. Schroders voted on over 60% more climate change and renewable energy shareholder resolutions in each of 2015-2017 compared to 2010. Regulatory, Policy and Legal Stricter and more demanding controls – in April 2019, the UK government updated its list of civil penalties for breaches of climate change-related regulations. Wider reaching remit with greater impact – e.g. carbon price is set to rise significantly and will soon cover a quarter of global emissions. With higher costs, demands could fall, and demand elasticity could lead to c.10% decrease in profits (Schroders). Risk of litigation for breaches or lack of progress: In 2018, major litigation cases included Exxon Mobil, the Dutch government, the US government and RWE. Cases weren’t all upheld, but they illustrate a turn in sentiment.

Putting Customers first pays benefits on Market Caps

Originally published - JUL 14, 2020.

The lessons here are timeless. Remarkably, there has been increased activity in Israeli IPOs and M&As after COVID-19 (1st round). Lemonade, an Online insurance company, led this. Lemonade Inc. raised $319 million in its initial public offering (IPO) on Wednesday on the New York Stock Exchange. The IPO was made at a price of $29 per stock, representing a $1.6 billion valuation The shares surged on the first day of trading, climbing by more than 100%, and continue to rise and is currently in excess of $4 billion. What makes the Lemonade Story more compelling is to comparison to the Market Cap of the leading Israeli insurance Companies Harel Insurance Investments and Financial Services Ltd. (TASE: HARL) (NIS 3.5 billion) The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) (NIS 3.3 billion). Cal Insurance (Nis 1.5 Million) Migdal (NIS 1.8 Million)

So, we have an Insurance startup worth more than the 4 biggest Insurance Companies, and Lemonade only focuses on Home Insurance. Although we are not comparing Apples and Oranges, exploring the key objectives that have propelled Lemonade would be useful.

They first placed the Customer Experience first and have tried to overcome the inherent conflict of interest in traditional insurance. They then use AI and Machine learning. This is the new frontier. Over the last few months, Covid19 has brought highlighted how Big Insurers and Banks mistreat their Customers and how much there is a need for change in customer-first approaches and user-friendly digital solutions.

I speak for myself about how many wasted hours and months trying to rearrange finances and Banks not being there for their customers. The same goes for Government Institutions and Municipalities. This can range from waiting on the phone, having no callback, waiting weeks, months, or not getting issues resolved at all and bureaucracy. So, it is no wonder that we seeing a big interest in Lemonade. This is only the beginning of a new world where Customers expect more and will change alliances for a better customer experience.

See Video for the inside story,

In conclusion , Social is personal and needs your footprint, theCEO's and the board's visiond. Treating Staff, and Customers fairly is a good place to start.