Bearing with companies in sticky situations

Just like our beloved Paddington Bear, who’s gracing screens for a third time, businesses today can often find themselves in sticky situations – although not from marmalade! Paddington’s escapades remind us that misunderstandings can land anyone, or any business, in a spot of trouble. In the second film, for example, the lovable bear finds himself in prison due to a misunderstanding (thankfully, he makes some surprising friends along the way!) This got me thinking: businesses often end up in similarly complex situations, where quick judgments are made without seeing the full picture.

In today’s world, businesses face immense scrutiny. The media often publish attention-grabbing headlines that miss the nuances within. Recently, for instance, tractor maker Deere, one of the companies we hold across our multi-asset and sustainable multi-asset funds, faced criticism for scaling back its diversity, equity, and inclusion (DEI) efforts. But with such issues, clarity is key. We were lucky enough to be able to engage directly with the business – a sign of how important Deere felt it was to get the story straight. We quickly understood that its approach was actually shifting – not retracting – to focus on internal DEI through recruitment and development while shifting away from sponsoring public events.

Knowing this fuller context allowed us to more confidently support the company’s aims, recognising that the changes were not what initial media reports had suggested. Engagement like this can play a role in preventing misunderstandings and allows us to help companies build accountability while keeping them out of the proverbial “prison” of public opinion.

Engagement is especially useful in complex areas like climate action. Some smaller companies and charities we support in our Rathbones Ethical Bond Fund may lack data on carbon emissions or net zero targets that are reported on third-party platforms. Without these data, these companies may look less ‘green’ than they actually are. Often, these companies are simply not big enough to be able to afford the expense of gathering and analysing the data. Through our deeper understanding, we know that some are genuinely living and breathing the transition to a greener world. But unfortunately they sometimes lack the resources or finances to formally report on this. Engaging with some of these holdings has enabled us to discuss barriers, like the cost of emissions reporting, and hear first-hand about their climate ambitions. By knowing the full picture we can avoid ignoring true sustainable operators in favour of businesses that have net zero targets but might not actually reach them.

Through these engagements, we aim to foster a true partnership with companies. Ultimately, we both want what’s best for the growth of the business in question. Sometimes it’s easy to jump to conclusions, but often it’s worth listening to the whole story, just as you would with anyone in your day-to-day life.

Now, I’m off to buy some popcorn to see what mischief Paddington gets into next – fingers crossed the Browns are there to help him out of any sticky spots.