A January, 2013 article in the FT about Sir George Buckley, entitled “Retired 3M chief finds a new life in sustainability” has quoted him bemoaning the fact that analysts overlooked the hard work he did during his tenure at 3M to “prevent pollution.”
Sir George expresses a degree of frustration that the good ESG work he says 3M did, both prior to and under his stewardship, went unrecognised by the market, even though he is convinced it added value in the long run.
He says 3M adopted the mantra “preventing pollution pays” more than 30 years ago and worked hard to reduce its energy use, minimise packaging and integrate materials such as biodegradable plastic.
Yet he says 95 per cent of people did not care about these “soft indicators of the culture of a company”, despite the likelihood that they should reduce the chance of a company having a serious accident or poisoning a river – failings likely to weigh on the stock price.
During his tenure, Sir George abandoned the “treadmill” of quarterly earnings guidance in an attempt to get shareholders to focus on the bigger picture. But he laments the fact that fund managers “are responding to the objectives of the people that manage them”, which in most cases means chasing short-term performance, which in turn drives asset growth.
“Three years ago at 3M we took the decision to try and move our investors to a more long-term approach, but I’m afraid the preponderance of investors is still short term,” he says.
According the article, Sir George was forced to step down from his positions as Chairman and CEO of 3M in 2012 because he turned 65. In response, however, he was appointed to serve as the “inaugural CEO” of Ownership Capital, an Amsterdam-based start-up that “aims to run concentrated, long-term equity portfolios where soft measures, such as environmental, social and governance factors, will be rigorously analysed alongside the traditional metrics of revenues and earnings.” It will be interesting to keep an eye on Ownership Capital, whose performance may help answer the question of whether preventing pollution pays.
[Click this link to read the full FT article, “Retired 3M chief finds a new life in sustainability”]