|
|
|
|
|||||||
|
|
|
Editorial Best Culture Should Run ForestryAmid the recent good news about the rising stock market and improving economic indicators, a smaller piece of news that also caught my eye was Tasmanian timber group Gunns taking an 18 per cent interest in Forest Enterprises Australia. The worrying part was Gunn’s statement “The investment by Gunns recognizes the strategic importance to the forest industry of further consolidation.” The idea that Gunns may become a major or dominant consolidator of the Australian commercial forestry industry should get the attention of the entire environmental movement. For environmental investors it is not a good prospect as Gunns does not meet Eco Investor’s criteria for environmental investment companies, and the prospect that it could one day acquire companies that do, such as Forest Enterprises, would lead to a reduction in investment choices for environmental investors. This has already occured when in 2007-08 Gunns took over Auspine. But Gunns-as-consolidator has even bigger implications for the broader environmental movement. The main problem with Gunns is not its desire to grow its business - we all support that - but its strategy for growth, its way of doing business that does not reflect contemporary values. In a nutshell, its management culture. Many environmental groups have spent years fighting Gunns’ proposed pulp mill in Tasmania, but the mill issue is only a battle, it is not the war. The war is to ensure that Australia’s environement and native forests are preserved by having a commercial forestry industry that is run on the very best environmental and sustainability principles. That means having forestry companies that uphold and implement those principles. So the objective is not just to stop or improve the mill proposal; the objective is to make a positive and lasting change in the culture at Gunns. To turn the company into a world leading environmental business that sits comfortably with the public and with environmentalists as a major player in the forestry sector. Over the decades environmental groups have developed strong political skills with governments and the public, but they have put less effort into business skills. In business if a company has a troublesome competitor it can either step up the competition or take it over. I suggest the environmental movement could solve this issue by taking over Gunns. Not all of it - just enough to change its culture. How much would it cost to become a significant shareholder? At the current share price of 98 cents, Gunns is capitalized at around $630 million. A significant shareholding of say 30 per cent would start at around $190 million. Surely the Australian environmental movement and its friends can speak for $200 million? Especially in regard to the movement’s signature issue for the past half century - native forests. Ethical investment is usually a matter of being all out or all in. Being out of Gunns has not worked. This issue can be solved if enough environmentalists get in.
|
|
Search Eco Investor |
