Selling your soul

by maddie millington-drake ~

Recently Swedish-based alternative milk company Oatly was accused of ‘selling its soul’ for accepting $200 million of investment from Blackstone. Blackstone is a US-based private equity firm whose investments have previously been linked to companies that are contributing to deforestation in the Amazon. In August of this year, Bloomberg published a report stating Blackstone CEO Stephen A. Schwarzman has donated $3.7 million to Trump’s 2020 re-election campaign.

Not a great picture all round so where does Oatly fit in?

Oatly needed a further $400 million of investment due to increasing demand and the need to expand their production; with the aim of building new factories in the US, Asia and Europe. They took $200 million from a green-deal bank loan which stipulates they must commit all their investments into sustainable solutions. They took the remaining $200 million from Blackstone which represents a 10% stake in the company.

The backlash from this announcement has been large with many faithful customers claiming they will no longer be purchasing from the brand and others calling for there to be a boycott against Oatly. However what are the other options?

Other alternative milk brands such as Alpro and Provamel are both owned by Danone whose revenue in 2019 was €25.3 billion. This leads on to how approximately 10 major corporations control the majority of food brands available in supermarkets today. Going down the rabbit hole of where the original investment from these companies came from or who owns the majority stakes in these companies would distract from the point of this column which is to question the standard at which we hold self-professed sustainable companies and the room for investment into this space.

Oatly released a statement addressing why they took the investment but it also touches on a vital point about making the mainstream capital markets understand that sustainability can be profitable; that it is not a fad that is going to go away:

“We thought that if we could convince them that it’s as profitable (and in the long-term even more profitable) to invest in a sustainability company like Oatly, then all the other private equity firms of the world would look, listen and start to steer their collective worth of 4 trillion US dollars into green investments”. 

They make a valid point and one that led me to write this column.

I personally drink Oatly’s oat milk and do not intend to boycott them because if I were doing so solely on the basis of who their investors are I would have to consider and look into every brand that I choose to purchase from. We buy from big corporations day in and day out without a thought or regard for how they make their money – this is of course changing and I think we are beginning to hold more people accountable. But I would be lying if I suggested that I choose sustainability over any other factor for every purchase that I make – I try to of course where possible but price and ease does come into my purchasing decisions.

So why is Oatly being held to account? Are we uncomfortable with the fact that they have been so open about where their investment is coming from? But if we found out at a later date they would probably have been boycotted for not being transparent. Again why are sustainable companies held to this higher standard?

We are creating a ceiling for how far purpose-driven companies should go: a ceiling for our perceived acceptable amount of growth and who they should be taking investment from.

By boycotting Oatly for taking investment from a private equity firm I fear we are making the argument shockingly black and white. As Oatly states, bringing these large firms into the sustainability fold and showing them that it can be profitable will ultimately change sustainability into a language they can understand. But pushing them away with boycotts could essentially deter further players entering this space due to consumer volatility and the potential for reduced profit and bad PR. Small companies like Oatly need investment to continue their R&D otherwise how are they expected to expand and ultimately put pressure on other industries or non-sustainable competitors to change their ways.

It is of course a moral dilemma and an increasing number of disruptive companies such as Oatly are going to be approached or offered the opportunity to accept funding from large corporations. Examples include Shopify’s sustainability fund that plans to invest $5 million annually into different carbon removal projects; Stripe, the American financial services company, have also pledged $1 million year into carbon removal; and finally, potentially the most controversial of all, Amazon announced their Climate Pledge Fund which involves an initial $2 billion that will invest in “visionary companies whose products and solutions will facilitate the transition to a low-carbon economy”.

Do companies accepting this sort of funding or investment immediately mean they are giving up on the values that they hold? Has the phrase ‘planet over profit’ meant that a company should never be seen to accept ‘dirty’ investment even if what they intend to do with it is trying to change the game and put the planet over profit.

I do believe that if we continue to build these ceilings for sustainable companies then the likelihood is that we will fail to achieve the climate goals that we need to reach. Firms such as Blackstone are sadly where the money is and where the funding for much-needed R&D can come from; to deter them from entering this space would risk business as normal continuing and smaller disruptive companies failing.

I am not saying that I disagree with boycotting as a mechanism in itself – it can be an incredibly powerful tool – but in this case I do. It is vital that we shift large amounts of the capital market towards sustainable brands, carbon removal and a sustainable way of thinking. The question stands about whether the backlash over Oatly accepting Blackstone’s investment is going to be representative of the course of growth for the sustainability sector?