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The first time I met with a financial adviser who wasnt my dad, I told him that I wanted to avoid fossil fuels, weapons manufacturers, and health insurance companies in my retirement investment portfolio. The adviser paused, sighed, and said, Ive got some bad news for you. He explained that since I was unwilling to pick individual stocks, it was virtually impossible to avoid investing my money in those industries. And even if I had the time and temperament to trade individual stocks to keep my investments from oil, weapons, and health insurance, my money might not keep pace with the market, or even inflation. In short, my adviser believed I could either grow my money or feel good about my investments, but not both. This conversation took place more than 15 years ago. In the intervening time, socially responsible investing became mainstream. These days, every brokerage and retirement plan offers at least one ESG (environmental, social, and corporate governance) investing option for concerned investors. But just how much have things changed since my adviser poured cold water on my investing idealism? Does the existence of ESG funds truly give you the option of investing responsibly? And considering the way Trump has declared war on the very idea of corporate responsibility, will ESG investing be around much longer? In a financial world that thinks morals are paintings on walls, heres what you need to know about investing your values. Rating companies on ESG performance The ESG rating system measures the performance of a fund, security, or company in environmental, social, or corporate governance issues. Specifically, analysts look at how the company fares in terms of its environmental sustainability, its social impact, and how its internal governance promotes equity. The goal of the ESG rating system is to provide an objective analysis and rating of the companys relative performance compared to other companies in the market. The rating is no more than a snapshot in time, since industry changes, market conditions, social and environmental shifts, policy adjustments within the company, and other situational changes can affect a score. ESG doesnt mean what you think it means If ESG investing specifically highlights companies for their environmental or social impact, or for their commitment to equitable corporate governance, then investing in highly rated ESG funds means you are not only doing right by your money but also helping the planet and your fellow humans. At least thats what youd assume ESG investing was all about. Unfortunately, thats not necessarily what highly rated ESG investments are doing. According to Kenneth P. Pucker and Andrew King, writing for Harvard Business Review in 2022, the ESG ratings which underlie ESG fund selection are based on single materialitythe impact of the changing world on a company profit and loss. This is in contrast to companies considering double materiality, which looks at environmental impact in both directions: How do the organizations decisions affect the environment and climate, and what potential effect will the climate and environment have on the companys bottom line? By looking only at single materiality, highly rated ESG funds are only interested in providing value to shareholders. The underlying companies may pay lip service to sustainability or social responsibility, but their business practices dont accept responsibility for actually making any changes that will help the environment or social issues. Paying more for less Even if highly rated ESG companies arent necessarily playing fast and loose with the definition of socially responsible, its likely that youre going to pay more to invest your money with an ESG fundand get less for your investment. Thats because ESG funds typically charge higher management fees than passive index funds while providing worse returns. This means ESG investing is an emotional decision rather than a sound investment in improving the planet, society, or your nest egg. Gaming the system The ESG rating system isnt set up to reward companies that are doing the hard work of mitigating negative environmental and social impacts. This doesnt necessarily mean that all highly rated ESG funds are full of companies headed by Gordon Gekko types. But there are certainly a number of companies that are happy to use the ESG rating system to their advantage. For instance, in 2023, presidential pal and hat weirdo Elon Musk decried the ESG rating system for ranking Tesla below Philip Morris (of cancer stick fame). Although Teslas business model is about reducing greenhouse gas emissions, Philip Morris earned a significantly higher ESG score for promoting diversity, equity, and inclusion policies within its C-suite. Musk claimed that Phillip Morris gamed the rating system to garner its 84/100 ESG score, compared to Teslas measly 37/100. And as much as it pains me to admit it, Musk was probably right. Theres not much a cigarette company can do to improve its environmental or social impact, so if it wants to improve its ESG score, it has to focus on corporate governance. Despite having an eco-friendly product, Tesla was dinged for the lack of diversity within its corporate governance. Instead of ESG spurring environmentally friendly companies like Tesla to embrace DEI initiatives in the boardroomwhich is what most idealistic investors probably would have preferred to seethe rating system created a way for companies like Philip Morris to greenwash their image. Navigating the ESG landscape in the Trump era It may come as no surprise that the current president is no fan of ESG investing. Between rolling back environmental regulations, disproportionately affecting women and people of color in his mass layoffs, and axing all diversity, equity, and inclusion within his line of sight, Trump has made it abundantly clear that he does not share any of the ESG values. His distaste for these values is shared by man within the Republican party. Even before Trump returned to D.C. for his second term, multiple Republican-led states had adopted anti-ESG legislation generally aimed at keeping ESG investing out of state pension funds. While the backlash against ESG is going strong, its unlikely that investors interested in putting their money in ESG funds will be shut out. Not only is ESG a good marketing strategy for businesses (see Philip Morris, above) but it is also popular globally, with 68% of global retail investors stating that their ethical views are an important consideration when choosing an investment, according to AXA Investment Managers. The ESG rating system isnt going anywhere. There are too many forces keeping it in place, even though high-profile tantrum throwers would prefer it to be gone. Invest like a cynical optimist I felt pretty low after my meeting with my financial adviser 15 years ago. Other than trading individual stockswhich will never be my investment stylemy only option was putting my retirement money into companies I hated. When ESG investing first gained traction a few years later, my cynicism kept me from becoming too enthusiastic about the new socially responsible investing options. It was no longer my first rodeo, and I knew that there was no easy answer to values investing. And that is the trick to investing your values: recognizing that there are no easy answers. It is possible to invest your money only in companies and organizations that you truly believe in, but you will have to handpick your investments and live with the risk of low returns or potentially losing principal. You can accept the flawed ESG rating system as the best option among a bad lot, but you will have to accept higher management fees and lower returns compared to index funds. Or you can invest passively in index funds, pay lower fees, and expect average returnsbut you have to accept that your money is flowing to companies you do not support. None of these options can relieve you of your ethical guilt, provide you with the investment returns you need, and require little-to-no active management on your partbecause no investment can do all of that at the same time. Accepting that the perfect investment doesnt exist is the fastest way to finding an investment strategy you can live with. As for me, Ive chosen to stick with the passive investing strategy that best fits my skills and temperament while committing to donating a percentage of my returns to organizations working to make the world a better place. Its an imperfect solution, but it works for me.
Category:
E-Commerce
What does it really cost to manufacturer products in America? And will high tariffs on Chinese goods bring those jobs back to the U.S.? These are questions that have been swirling since Trump announced a 145% tariff on Chinese products last month, since reduced to 30%. But rather than debate or speculate, the pleasure jewelry company Crave has decided to do something else: Its opening its books, sharing the full figures, and letting consumers choose what version theyd like to buy while exploring the global impact. In a Kickstarter campaign for their new Tease Necklacea vibrator worn around the neck as an accessoryCrave will offer three ways to buy it at three different prices. The first Tease will be made in San Francisco, with (most) of its parts sourced domestically. The second Tease will be assembled in the U.S., with parts acquired from China. And the third Tease will be completely sourced from China. In a quest for full transparency, Crave shared a spreadsheet accounting their costs to produce each model. The takeaways are fascinating. The total build cost is $80.31 sourced in the US, $47.83 assembled in the U.S., and $25.74 made in China. They will retail for $195, $149, and $98 for this Kickstarter promotion on which Crave says it’s not cutting a profit. Even with tariffs currently sitting at ~30% on Chinese components and goods, the difference in the cost of tariff fees for each necklace negligible ($4.16, $5.34, and $5.87 respectively). But the Tease is sill less than the cost to create in China than it is in the U.S. Take China off the map as a global supply chain or factory? That’s not what’s going to happen, says Crave CEO Michael Topolovac. If tariffs hold this rate, China will be as strong as ever. Unpacking transparent pricing Last month, a report from Punchbowl News claimed that Amazon was considering including the tariff costs on product listings. When the White House heard, they called the move hostile. Who knows if Amazon was ever actually going to take such a step, but the story struck a nerve with the public because tariffs are an invisible tax that’s typically built directly into a product’s pricing. Nearly every product we buy today has a global footprint, and in an era where weve just faced considerable inflation, thats a scary premise. While digging through Craves spreadsheet with Topolovac and co-founder Ti Chang, I began to understand why they believe high tariffs will be devastating to small businessesand ultimately futile as a strategy to get more goods built in the U.S. For instance, the San Francisco model can have its steel sourced in America for $25. That same metal costs $3.50 if you import it from China (and even after a 30% tariff, its only $4.55). That tariff will make the product cost more, but still a whole lot less than if Crave went with American suppliers. When you add labor, the price difference only grows. The core metal cylinder costs $20 in labor to machine it in the U.S., meaning it costs $45 between material and labor in all. Thats $20 more than buying the entire product sourced and assembled from China. Tracing components you simply cant make in the U.S. But truth be told, a piece of machined metal is a simple case. Lets consider the electronic components of the system. Batteries and motors cant be sourced in America, Crave explains, since the factories to make them don’t exist. So even their full U.S.-made Tease has these pieces purchased overseas. Crave can source its microprocessor from the U.S., but the circuit boards are made in China. And the microprocessor needs to be affixed to the board there. So Crave buys a microprocessor, pays a 30% tariff to ship it to China. Then China plants it onto a board, and ships it back, adding another 30% tariff. Theoretically, you can have discussions with the government to have tariffs waved in some of these more complex cases. If you’re Apple, youve probably got a whole division in China that’s managing that, says Topolovac. But theres no way that our factories can deal with the overhead of the Chinese government. The spreadsheet also reveals the futility of sourcing goods in China and then assembling them in the U.S. You end up paying a tariff cost and a higher labor cost. Its the worst of both worlds that way, says Topolovac, who notes that theres just nothing to encourage this practice at the scale and cost structure of their product. For most small businessesand even many largethe math simply doesn’t work out to bring manufacturing back to the U.S. (These issues affect mega corporations too. Logistics are why major performance apparel companies, like Nike, have grown so reliant on Vietnam.) In theory, tariffs could encourage more factories established in the U.S. But new infrastructure of this scale is completely outside the reach of Crave or its peers. Theyd need to raise hundreds of millions of dollars and spend years spinning up supportive factories, and even still, theyd need to source rare earth minerals globally. If your plan was to take out two to three million US manufacturers or brands like us, this is how you would do it, and [a 145% tariff] is how you would kill them, says Topolovac. Modern small business rely upon mega infrastructures Chang remembers building Incognito, her company before Crave, and relying on the technological cushion of China to do so. I was able to get that business going because we have free trade. I could go over to China, have an idea, have things made, and bring that inventory into the U.S. And that enabled ideas and innovation to happen, she says, noting that efficient manufacturing abroad lowers risk. As an entrepreneur, you can experiment and you can testnow, if you’re a new entrepreneur making products, you have no stability. And that lack of stability is ultimately the most frustrating point to Crave. They are constructing new products for the market as they follow the news cycle and project their ever-shifting costs. If they hadnt planned ahead, stocking up on inventory in anticipation of the 145% tariff spike, they would have been sunk. Overall, even when the business works out, the mental overhead and additional planning its required has become a distraction for Crave on top of the day-to-day challenges of running any product business. The world sets up the rules and supply chains, and you play by those rules, says Topolovac. But if the rules change every week, or whatever, it’s brutal.
Category:
E-Commerce
For decades, corporate leadership has been dominated by analytical prowess. Ascending the corporate ladder often meant demonstrating value through meticulous spreadsheets, precise forecasts, and detailed execution plans. Vision was acknowledged, but only when accompanied by a comprehensive road map. This paradigm, however, is shifting. In today’s era of rapid change, emotional complexity, and cultural fragmentation, linear strategies are insufficient. The most impactful leaders can envision new futures, cultivate emotional connections, and distill complexity into relatable narratives. The next generation of C-suite executives won’t just be adept operators; they will be architects of meaning. In short: They wont just be strategists, but creatives. Rethinking Leadership: From Logic to Imagination Historically, businesses have prioritized logic over creativity, resulting in leadership cultures rich in data but deficient in imagination. But creativity is now paramount. A recent Gallup study revealed that only 30% of employees feel connected to their company’s mission or purpose, marking a record low in 2024. Notably, fully remote workers struggle even more with this connection, as physical distance often translates to a mental disconnect from their employer. Moreover, a Deloitte report found that only 26% of workers strongly agree that their employer treats them as whole individuals, recognizing their unique contributions and skills. These findings underscore a critical issue: The emotional infrastructure of leadership is faltering. Efficiency alone is no longer the answer; resonance is essential. This is where creatives come into play, not as peripheral marketers or consultants, but as integral members of executive leadership. Imagine a CEO who leads with storytelling, not just statements; a chief human resources officer (CHRO) who designs employee experiences with the finesse of an artist; a boardroom that embraces visuals, metaphors, and even moments of silent contemplation to navigate complexity. What Creative Leaders Do Differently Creative leaders transcend problem-solving; they reframe challenges, anticipate tensions, and design interactions with intentionality. They consider the emotional ripple effects of decisions and understand that before individuals commit to a plan, they must resonate with its underlying story. They recognize that logic informs, but emotion compels. In uncertain times, strategy provides direction, but storytelling fosters alignment. Data offers explanations, but design inspires action. These leaders treat organizational culture as a canvas, viewing each initiative as an opportunity for meaning-making. They might commence a product launch with a narrative circle instead of a sales chart, or conclude a quarterly review with a thought-provoking question rather than a performance dashboard. These practices aren’t gimmicksthey’re essential tools for leadership in an age where facts alone are insufficient. If Creatives Led the Boardroom Envision a leadership meeting that begins not with status updates but with the question: What story are we living right nowand is it the one we want to be telling? Instead of diving into objectives and key results (OKRs), the team members reflect on the narrative shaping their organization and assesses its alignment with their goals. Imagine strategy sessions resembling creative studios more than command centers. Whiteboards adorned with sketches, not just key performance indicators (KPIs); ambient music setting the tone; and silence embraced as a space for contemplation. In times of crisis, the initial inquiry isn’t How do we manage this? but What does this moment ask of us as humans? If this approach seems radical, it’s only because we’ve long separated creativity from leadershipa separation that’s contributed to misaligned teams, ineffective strategies, and stagnant organizations. A Real-World Example: Airbnb’s Creative Leadership Airbnb’s response to the COVID-19 pandemic is a tangible example of creative leadership. Facing unprecedented challenges, CEO Brian Chesky didn’t rely solely on traditional strategies. Instead, he embraced storytelling and design thinking to navigate the crisis. Chesky penned heartfelt letters to employees and hosts, transparently communicating the company’s challenges and decisions as the travel industry cratered. He prioritized the community’s well-being, supporting hosts, and implementing flexible guest policies. This empathetic approach reinforced Airbnb’s brand values and maintained trust during turbulent times. On top of that, Airbnb reimagined its platform, introducing online experiences to adapt to the new normal. This innovative pivot showcased the company’s ability to blend creativity with strategic foresight, ensuring resilience and continued engagement with its user base. A Framework for Expanding Creative Leadership in the C-Suite Integrating creative intelligence into the C-suite doesn’t require a complete organizational overhaul. It starts with a mindset shiftan openness to design as a way of leading, not just a way of presenting. These practices are not soft skills; theyre strategic competencies that help leaders unlock deeper engagement, innovation, and trust. Here are four ways to begin. 1. Sense before you solve. Initiate major discussions by exploring the emotional landscape. Ask What are we feeling? to surface insights beyond data. This practice creates space for intuition, unspoken dynamics, and early signals that often get overlooked in performance reviews or planning decks. When leaders learn to read the room, not just the metrics, they make decisions that resonate more deeply and stick longer. 2. Design the experience, not just the strategy. Recognize that every policy, product, and meeting shapes the employee experience. Deliberately craft these moments to align with the emotions and values you want people to carry forward. Whether its a town hall, onboarding journey, or performance conversation, the how matters as much as the what. Design-thinking principlesempathy, prototyping, and iterationarent just for products; they belong in leadership, too. 3. Use storytelling as a strategic tool. Move beyond declarations. Weave in narratives that encapsulate vision, challenges, and aspirations, fostering deeper connection and shared identity. A well-told story doesnt just informit invites participation. It helps teams locate themselves inside a larger arc of meaning and progress. Leaders who communicate in narrative terms create alignment not just through direction, but through emotional coherence. 4. Invite diverse perspectives. Incorporate voices from artists, designers,facilitators, and other creative thinkers to challenge assumptions and expand the lens. These perspectives introduce new metaphors, fresh language, and alternative ways of making sense of complexity. When we bring in people who see the world differently, we dont dilute business thinkingwe deepen it. Innovation thrives at the intersection of difference. The Future of Leadership: A Studio, Not Just a War Room We’ve reached the limits of what linear thinking can achieve. Addressing challenges like cultural fragmentation, technological disruption, and global crises requires not just intellect but imagination. Future leaders won’t merely ask How do we grow? but What are we growing toward, and who do we aspire to become? They will: Design rather than direct. Curate experiences instead of solely managing outcomes. Imagine possibilities beyond analyzing current realities. Because the future of business isn’t something to be managed into existenceit needs to be imagined, crafted, and brought to life through creative leadership. This isnt about replacing strategy with art. Its about integrating the two so that organizations can lead not only with precision, but with vision. The companies that thrive in the coming years will be the ones bold enough to create what doesnt yet exist, and human enough to make it matter.
Category:
E-Commerce
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