Greetings from HCP Group Chairman and Vice-Chairman

HCP Group’s annual general meeting elected a new board of directors for the company on September 28th, 2020. The new chairman of the board is HCP’s partner and board member Timo Vertala, and the new vice-chairman is HCP’s newest partner, Cobbleyard Real Estate CEO Christoffer Sundberg.

HCP Group chairman of the board Timo Vertala (left) and vice-chairman of the board Christoffer Sundberg (right).

HCP Group chairman of the board Timo Vertala (left) and vice-chairman of the board Christoffer Sundberg (right).

Timo Vertala, you were elected as HCP Group’s new chairman of the board at the board’s inaugural meeting 29.9.2020. Congratulations! Tell us about yourself and how you are doing.

Thank you. Firstly I would like to thank my predecessor Elias Koski and I would like to wish him continued success in his role as chairman of the board of Helsinki Capital Partners fund management company.

I have worked in various executive positions and been a partner at HCP since 2010 and a board member since 2011. Chairmanship of the HCP Group board was the next natural step for me, and I am grateful for the trust shown by the other partners towards me and the rest of the new board.

Could you tell us more about the new board?

Work within a board of directors is teamwork, and I am convinced that we will achieve results with the board of directors we have elected. Other elected board directors in addition to myself were HCP’s founding partner and CEO Tommi Kemppainen, compliance officer and partner Juhani Halminen as well as our strategic investor, Cobbleyard Real Estate CEO Christoffer Sundberg.

The board members complement and support each other with their backgrounds, experience, and professional expertise.

The year 2020 has unarguably been a year of change in the world and in financial services. What particularly will you stress in the work of the board?

The world is changing radically and quickly. As a smaller company, HCP has the resources and expertise to react to things much more quickly than bigger asset managers. When the environment changes, you have to change – and this is why companies need to actively renew in order to survive and to thrive.

I will in particular focus on transparency in decision-making and ensure that HCP’s strategy is implemented appropriately and with measurable results by operating personnel.

You mentioned the importance of active renewal. Can you explain in more detail what this means for HCP’s strategic development in the current market?

Our funds are managed by our four-person investment team, so areas of responsibility are clearly defined and the group works constructively together. As to the firm’s development, we as a company have 13 years of growth experience, and we will continue actively furthering our sales and marketing by using this experience.

In addition to this, we are open to other market opportunities. HCP has historically very strongly focused on publically listed securities and alternative investments. Interest rates are historically low and inflation predictions are unclear, so Finnish institutional investor rightfully seek out also other opportunities in alternative investments.

Christoffer Sundberg, you became an HCP partner in summer 2020 and were now elected as a board member and vice-chairman. Could you tell us about yourself and about how you ended up investing in HCP?

I am a professional investor and have been an investor in HCP’s funds for several years now. First, HCP’s story of how to manage external assets and invest responsibly awoke my interest. I got to follow the company quite closely for a few years and my interest only grew. When an opportunity opened up to further intensify our cooperation, I immediately took it.

You have a long career in real-estate investing and in managing real-estate funds. How would you describe the current market situation in Finland and the Nordics for real estate?

In Finland, real-estate investing is only approximately 15 years old, when the first institutions-facing investment funds were launched and asset purchases began to be financed through debt in addition to equity. Then or a little bit before, international property investors arrived in the Nordics and in Finland. At the time of writing this, the supply of real-estate funds in Finland or generally opportunities to invest in real estate indirectly has grown quickly. This means that demand has raised property prices to record levels, and often these are justified by an upside in rents (cash-flow). This driver can be questioned, and for example in Stockholm we are seeing a market correction. The same market correction is now arriving in Finland and will be probably be seen in valuations towards the end of the year. It’s hard to predict how big this correction is especially if and when the number of transactions decreases and market-based appraisals do not have the market data they need. Different sectors of real estate (office, commercial, residential, care homes, logistics, hotels, etc.) suffer in their own ways, as the global pandemic has restricted mobility. Big trends in the use of spaces seem to be strengthening.

How can Nordic asset managers best compete with international companies? Where do you see the most interesting opportunities for growth?

Generally real-estate investing is the ”odd bird” of asset classes. Returns are relatively low and many investors sell so-called active asset management, which means that value is created locally at the level of the object. This requires local expertise and a local team. These are important elements in implementing active strategies. The downside is that this can give rise to an expensive fee structure, which taxes the immediate return promised to investors. This can create a mismatch that forces the portfolio manager to raise the properties’ risk profile. There is much talk about liquidity risk, which is one of the easiest ways to improve properties’ net returns. Location risk is one of the biggest factors in liquidity risk. How properties are utilized in the future will change in the post-corona world. This creates opportunities for local active asset management. In the short term, listed securities of real-estate companies seem attractive and in the medium term, Nordic direct properties. We still see value in the office and logistics sectors, especially for those implementing active asset management.

HCP Group owns the Helsinki Capital Partners fund management company, whose funds are open to subscriptions until 31st of December 2020. Book a virtual meeting or make a subscription by clicking one of the buttons below.

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Diversifying into Alternative Investments Is Worth It

In February and March this year, we saw a sneak peek of what it looks like when equity markets’ valuations begin to revert to their historical mean. Very quickly, a third of the market’s value disappeared. The graph below shows the S&P 500 index and HCP’s multistrategy fund HCP Black, which makes wide use of alternative investment targets.

In terms of valuation, the equity market did not even reach its historical mean in March. The graph below shows the total market capitalization of American companies (Wilshire Total Market) against US GDP. The y-axis is marked in trillions of dollars (T).

Source: https://www.gurufocus.com/stock-market-valuations.php

Valuations would reach their recession-era historical mean if markets collapsed to a third of their current level.

Source: https://www.gurufocus.com/stock-market-valuations.php

From this we come back to our first graph and the reason why diversifying into alternative investments, such as the HCP Black fund can significantly improve the benefit of diversification and thus decrease an investment portfolio’s risk during economic shocks. If you carry a significant amount of risk in your own business, or maybe you are a startup investor or just a stock investor who felt uncomfortable during the crash in March, this is an opportune time to familiarize yourself with alternative investing. Even a small allocation from the entire portfolio into alternatives can increase the entire portfolio’s resilience through the cycle. Such is the difference between alternative and traditional investments that it can be clearly seen in February’s and March’s returns. More information about our solution for risk management can be found here.

HCP Focus portföljbolag publicerade sina resultat och aktiernas värde sköt i alla tiders höjd

HCP Focus starka resultatperiod – läs fondförvaltarens kommentarer gällande bolagen i fonden

Förra veckan avslutade resultatperioden för portföljbolagen i HCP Fokus. Resultatperioden började i mitten av april och alla bolag har nu rapporterat sina resultat. HCP Focus har varit mycket resistent/härdig gentemot koronamarknaden. De utvalda megatrenderna, till exempel digitaliseringen av samhället, hjälpte fonden att uppnå rekordresultat. På kort sikt är det inte troligt att dessa megatrender skulle ändra sig. Snarare tvärtom. De rådande trenderna har  accelererat ytterligare.

Många företag har gynnats av ett exalterat digitalt språng. Situationen har medfört att både arbete, handel och tjänster i allt högre grad har förflyttats till nätet. Många företag har därmed gynnats av det exalterade digitala språnget.

Allt som allt, ligger totalt åtta av tolv aktier antingen på sitt högsta värde eller mycket nära det: Intuitive Surgical, Facebook, Amazon.com, MercadoLibre, Shopify, Etsy, PayPal och Nvidia.

 

På kort sikt finns det dock utmaningar. Trump har åter börjat hetta upp handelskriget med Kina. De senaste förändringarna berör planerna på att tvinga de kinesiska bolagen bort från de amerikanska börsarna samt att förhindra pensionsfonder från att investera i dem.

På grund av detta har de enda kinesiska bolagen i HCP Focus, Baidu och Alibaba, varit under tryck de senaste dagarna. Alibaba förväntar sig att bolaget kommer att kunna svara på lagförslaget och att detta därmed inte torde ha en inverkan på bolaget. Däremot överväger Baidu att dra bort sina aktier från Nasdaq-börsen.

16.4. Intuitive Surgical
29.4. Facebook
30.4. Amazon.com
5.5. LendingTree
MercadoLibre
Match Group
6.5. Shopify
Etsy
PayPal
18.5. Baidu
21.5. Nvidia
22.5. Alibaba

Intuitive Surgical – Portföljens resultatperiod tog till en början fart med bolaget som är känt för sina kirurgiska da Vinci robotar. Korona orsakade utmaningar för bolaget då andelen  robotiserade operationer utförda i Kina sjönk med 95% i mitten av februari. Buklandningen följdes trots allt av ett kraftig uppsving på 70% varmed bolaget innan slutet av mars uppnådde nivån de haft innan korona. Det är möjligt att situationen kunde normaliseras under det tredje kvartalet ifall Europa och USA följer liknande mönster. Bolagets tillväxtpotential ser bra ut. Den åldrande befolkningen är en obestridlig megatrend. Aktiekursen har korrigerat sig över 50% uppåt sedan svackan i mars och är nära att uppnå nya höjder.

Facebook – En positiv resultatöverraskare. Då användningen av sociala medier ökat som en följd av att människor spenderat tid i karantän under koronapandemin är det lätt att förstå att Facebook hör till en av periodens vinnare. Detta syns även i aktiekursen som ligger på alla tiders höjd.

Amazon.com – Bolaget klarar sig bra. Kunder föredrog att handla på nätet och beställa hem varor istället för att gå i vanliga butiker. AWS affärsverksamhet inom molntjänster ökade med 33%. Amazon är fondens äldsta investering och kommer att fortsätta som dess grundpelare ännu för en lång tid framöver. Förra veckan nådde aktiekursen nya rekord.

LendingTree – En av årets förlorare. Konsumenterna förtroende i bolaget knäcktes då världsekonomin drabbades av en total knockout. Då konsumentens arbetsplats-situation är osäker vågar man inte konsumera som förut, i synnerhet inte kostsammare inköp som ofta kräver lån. Bolagets resultat är bra. Dock har osäkerheten som korona har medfört kastat en skugga över vad framtiden har att komma med. Aktiens värde har sjunkit med 17% sedan årets början.

MercadoLibre – Latinamerikas ”Amazon” hör i likhet med andra e-handelsplatformer till ett av bolagen som gynnats av koronapandemin. Under pandemin har lokala småföretagare övergått till MercadoLibre plattformen för att idka handel medan konsumenterna köper allt mera online. Bolagets aktie ligger på rekordnivåer.

Match Group – Tinder är förmodligtvis den mest kända bland flera av de dejtingtjänster som ägs av Match Group. Bolaget gjorde ett bra resultat, dock skyms även detta av korona. Människor använder sig mer av dejtingtjänster medan de spenderar tid i isolering, men är trots allt inte villiga att betala för dem. I slutet av mars gjorde användarna av Tinder tillsammans ett rekord på 3 miljarder svep (“swipes”) under en dag. I länder där rörelseregleringar har lindrats har man kunnat observera att andelen betalande kunder börjat ta fart igen. Aktiens värde ligger 8% under sin föregående topp i januari.

Shopify – Årets kursraket. Sedan årets början har bolaget mer än fördubblat sitt värde och har den högsta vikten i fonden. Shopify förväntas växa med minst 30% i år. Shopify har på ett utmärkt vis lyckats svara på den rådande korona-situationen genom att förbättra bolagets produkter. Under den föregående veckan offentliggjorde bolaget ett samarbete med ett av HCP Focus portföljbolag Facebook. Samarbetet gäller tjänsten Facebook Shops. Med hjälp av denna tjänst kan återförsäljare skapa brandade butiker både till Facebook och Instagram. Samarbetet gynnar båda bolagen. Win-win!

Etsy – Företaget med den näst tyngsta vikten i portföljen. Nätbutiken för hantverk och vintagevaror blomstrar. Etsy försäljarnas bruttoförsäljning fördubblades i april. Kunder sökte främst efter skyddsutrustning relaterad till korona (masker, skyddsglasögon, etc.). Således kan den kraftigt ökade försäljningen vara övergående. Den växande trenden av online shopping ser lovande ut. Aktien har stigit med 75% sedan början av året.

PayPal – En växande onlinebutik behöver en pålitlig betalningsförmedlare för att fungera. Online shoppingtrenden har främjat PayPal och företaget är väl positionerat inför online-shoppingrevolutionen. Detta har även övriga investerare lagt märke till. Aktiens värde ligger högre än någonsin.

Baidu – Portföljens olycksbarn. Aktiekursen ligger på samma nivå som för åtta och ett halvt års sedan. Under det här året har aktien sjunkit med 18%. Då man beaktar situationen som korona medfört, ser läget i Kina nu bra ut och är på denna front med ett försprång till andra länder. Antalet dagliga användare av Baidus App ökade med 28% i mars till 222 miljoner och sökförfrågningarna med 45%. Trumps handlingar kan drabba Baidu och dess eventuella reträtt från Nasdaq gör mig som portföljförvaltare eftertänksam. Bolaget utgör den mest sannolika kandidaten för att ge plats åt en ny investering i fonden.

Nvidia – Stark tillväxt inom verksamheten datacenter. De största kunderna inom artificiell intelligens utgörs av Amazon, Google och Microsoft. Även verksamheten spel visar en god tillväxt. För tillfället syns inga gränser för Nvidias tillväxt. Bolaget rider på det digitala språngets vågkam. Det är svårt att finna något negativt att säga om Nvidia och det syns även i dess aktiekurs som ligger på sitt högsta värde. Definitivt en av portföljens diamanter.

Alibaba – Liksom för andra kinesiska aktier har bolagets aktiekurs under den senaste tiden varit under press. Alibabas resultat överträffade tydligt förväntningarna och dess framtid i världen efter korona ser mera lovande ut jämfört med flera andra kinesiska företag. Utbrottet av koronaviruset ökade till exempel användningen av Alibabas online tjänster inom dagligvaruhandel, molntjänster och tjänsterna för distansarbete. I Kina ökade detaljhandeln med 88% inom livsmedels- och supermarknadsbranschen. Under april och maj har volymen för transaktioner återgått till nivån före krisen. Företaget räknar med att dess omsättningen kommer att öka med 27,5% under denna räkenskapsperiod.

Det går extremt bra för digitala bolag och detta gör många fundersamma. Kommer denna utvecklingen att fortsätta, eller är ett magplask på kommande? Centralbanker har klargjort att de kommer att göra sitt yttersta för att undvika en kollaps av marknaden. Det sägs att det inte lönar sig att utmana centralbankerna. Det håller jag med om. Om det går annorledes så finns det större bekymmer än aktiemarknaden i vårt samhälle.

Gör teckning

Med vänliga hälslingar,
Pasi Havia

HCP Focus fondförvaltaren

It is a long and never-ending race

The race

Finance is my passion and I am fortunate to have it as my profession. Even after some 25 years in the industry, investing money still is the most exciting thing I can think of doing as a profession.

In order to succeed in investing, one needs to have an edge. Whatever your edge is, it is always under threat and it only lasts for a moment in time.

This is because any advantage acquired by an edge will attract competition fast. After your edge becomes common knowledge there is no profit to be made anymore and actually neither is there an edge.

The race in the late 1990s

During my career, I have seen my first special skill as a sales trader become worthless as computers and algorithms replaced humans in this function.

I will illustrate the skill I had in this example:

Buy these 32 different stocks in these European markets “over the day, max 1/3 of volume, with  volume-weighted average price target (VWAP), happy to own -6% from yesterday’s close“

Today you can automate this trade command on a computer before the market opens and it will perform the whole procedure.

It was clear already in the mid-’90s that automation will replace humans in many functions. However, there were many years to earn profits with this edge, before new competition crowded this specific race. Now sales traders have lost their jobs to algorithms.

The race in the new millennium 2000s

The next track where there was room to make profits was securities analysis. Instead of just looking at stocks and bonds, I looked into all investable objects in parallel and compared their risk and return characteristics.

Together with my first HCP crewmate and co-founder  Jarno Lämsä we built two programs named Sijoitusmoottori (Finnish for investment engine) in 2009. We were partly financed by “TEKES” funding from the Ministry of Economic Affairs.

The idea we developed is still at the very core of my investment strategy in the HCP Black fund. For the first eight years, HCP got its bread and butter from this specific style of investing before expanding to parallel races within the field of investing.

The race in the 2010s

There is no slowing down on research and development when one aims to hold an edge.

Our team did some burdensome manual analysis of corporations in the early 2010s that was almost undoable as it was so human resource-intensive. Today the same study can be done by a computer and database. As in the late ’90s sales traders lost their edge to algorithms, now computers and databases have replaced humans in this calculus.

In our HCP Focus fund, we started using one specific database to replace manual analysis in 2015. Using this tool instead of manual analysis is the most important source of Focus fund’s alpha ever since. For the last five years, we have gotten our bread, butter and even some cheese from this specific investment analysis.

So what competitive sport is this really?

Finance as a sport might sound unfair as any practitioner can expect their skillsets to be cannibalized sooner or later. But the never-ending race goes on and professionals will continue to look for new tracks to make profits in.

The understanding and knowledge acquired by holding a certain edge in the past are not for nothing though. Only due to my work on artificial intelligence (AI) in the mid 90’s I have developed a mature understanding of what computers can do in finance. This expertise allows me to currently have 26 % of assets invested in trend-following strategies in the HCP Black fund, which is partially based on machine learning.

Also, the expertise that our team acquired by doing a burdensome analysis of corporations manually, made it possible for us to evaluate different databases on their accuracy. We had high-quality benchmarks of the calculus done by ourselves to compare the computer calculus with. This allowed us to make a well-informed decision when choosing the database used in the Focus fund.

We live with the well-known market wisdom “Enjoy as long as it lasts – it never does” and work on research and development constantly. That is the way to constantly have the edge as a team. What all we are working on right now, I will tell you later, and it is that way for a reason.

Just yesterday we published our research on “risk parity” which type of investments we are not currently involved with for a reason.

By recruiting stars your team can be the whole universe

Say hello to HCP’s Analyst/Institutional Sales Anthony Simola

Quite exactly a year ago, I met Anthony Simola, who was looking for his first job in finance. He had seen me speak at Sijoitus Summit in 2016 and some three years later he announced that he wishes to work with us in analyzing stocks. He had been investing money for some years and his strategy was well-documented since day one. What was there not to like.

I soon learned that this confident young man is not lacking in identity nor maturity. He also had the most critical characteristic that we treasure. That being integrity. My own findings got backed up by a letter of recommendation from Columbia University.

As with any profession, the practitioner becomes very fast in evaluating a talent. I had a feeling that with Anthony there was plenty. He has gone through education with the best possible track record: IB high school in Finland, then Vanderbilt and Columbia University in New York right after.

There was more, however. Soon I learned that he had written and published a book in 2015 at the age of 22.

Anthony had first studied in depth what thinking actually is and what one can do to enhance it before even considering a specific topic in which to apply it. I had to like his approach!

So, now I knew that I was dealing with a real talent. Anthony demonstrated an understanding of topics and constructs that – even if not being rocket science– was something that could not be explained only by his academic studies.

I asked him to name the very core literature that he builds his understanding on. He replied with a list of 50+ names of authors that he has read in the last few years – all of them classics in mostly Western philosophy, psychology, history, economics, politics, and fiction.

Now my formal reasoning could easily catch up with what my gut feeling had told me. Anthony is remarkably knowledgeable and also dead set on acquiring exceptional skills in investing money. Hiring him was not only an easy decision – it was a no-brainer.

The dream team

”At HCP we get joy from the wide diversity of our team. As the dream team in Star Wars, it is totally impossible to get us marching synchronic, but when the golden robot, young man, and a computer on wheels meet at the same point looking at the same challenge with the same powerful mission to solve it, things do happen as in a pre-choreographed state of trance.”

This is how I described the dream team in a foreword to dear then HCP crewmate Pekka Puustinen’s book Financial Service Logic: In the Revolution of Exchange in Banking and Insurance (2015).

The idea is to have a maximally diversified team so that each and every one can use their specific skill as a superpower for common good. In this group, the normative definition of normal becomes very lax as the standard deviation in different features in our team is big. No one really is the odd one out.

Why should you be only one star if you can be the whole universe

We live by this phrase that a famous conductor once told me. What he meant is that even if you have a special talent you still don’t want to be defined only by this single feature. We want to have a rich life and be so much more!

I’ve had Anthony Simola in our team now for a year. He has worked for institutional sales while further developing his skills in stock analysis. I will make sure Anthony has the best possible mother’s milk to further grow in this business and I look forward to him taking more responsibility at HCP. We will also make sure he will have such a blast working together and alongside with the dream team and the whole #HCPSPIRIT community.

For me, once again as with all of my dear crewmates it is my privilege and pleasure to get to be your jungle guide.

The Nordic KPI – How much does your company contribute to society in euros?

What did your company do for the world last year, and how big part of your business does it correspond?

We measure our impact on workers, clients, communities, and the environment. As a B Corporation, we do this using the B Impact Assessment (BIA), which the independent certification body checks.

To us, the BIA is the best toolbox for measuring if a company is causing more good than harm. It asks the real questions, such as: if the company shares all financial information with its full-time employees; how many times more the highest-paid worker receives compared to the lowest-paid full-time worker; what % of the company is owned by workers and management?

The BIA would catch any company just trying to make their business look nice.

As with everything there is always room for further research and development. We were first B certified three years ago and currently going through reassessment. One thing that we noticed – back then and now – is that BIA recognizes payments for charity but not as much the payments for tax and social costs.

These payments deserve a closer look as they contribute to the wellbeing of society greatly. Why not be transparent about it? In our Sustainability Report 2018, we published for the first time the size of the tax and social security payment in relation to revenue in one simple chart (see below).

HCP – Nordic KPI (v1.0)

In our Sustainability Report 2018, we published for the first time where our cash goes.

This year we have hired two trainees to further study this topic. Sofia Nelson will draft our annual Sustainability Report, where we look at our impact on all stakeholders. Maj Lundström will study Finnish and Nordic companies in comparison to their global competition to find out how much they contribute to society in proportion to their revenue. This simple ratio we named the Nordic Key Performance Indicator (v1.0).

Now let’s go back to the question where we started: “What did your company do for the world last year, and how big part of your business does it correspond?” Out of our €1.433.363 revenue, we contributed 22 %, meaning a total of €313.076 to the society. Our Nordic KPI (v1.0) was 22%.

So, what is your Nordic KPI?

B Corps making a splash at Slush

What an afternoon, and what an evening party! 

On Friday 22nd of November, we organized ‘To B or not to B’ seminar to promote B Corporation certification among visitors of Slush –  the leading tech and start-up gathering in the world. 

To B or not to B

We were happy to enlist support from Goodwings, Aliter Networks, Kraft, and Ramborn Cider sharing their B Corp stories. We met entrepreneurs and some larger companies in Finland interested in B Corp and trying out the B Corp impact self-assessment tool.

We became the first Finnish B Corp in 2017. B Corps are known for integrating a positive impact on customers, communities, workers, and the environment through good governance. They are for-profit but with a bigger purpose. The pioneers of B Corps are Ben & Jerry’s and Patagonia, but last month also Burton Snowboarding and the Guardian the media group joined the global movement of over 3,000 companies making a splash.

Now there are a dozen Finnish companies that we know are interested in becoming one. We welcome this because this is a network we trust. We use other B Corps’ products and services because we know the providers to be good. And this, surely the people who came to the after-party at our HQ can testify. 

The B Corp story in Finland has just begun. We want to support the growth of the B Corp community here by organizing monthly B Nights where anyone on their B journey can meet and chat with people with similar ambition. We open up our HQ at Kaapelitehdas as a venue. 

The first B night will be on Wednesday 11 December. We look forward to more B Corps in the Nordics. Who knows, your company may be the next  Patagonias or Ben & Jerry, promoting the idea of balancing purpose with profit.

Christian from Goodwings

Christian Møller-Horst from Goodwings explains how you can save in travel expenses while donating to charities.

Maxime from Lombard & Odier and Tommi from HCP

HCP’s Tommi Kemppainen pulled another B Corp asset manager Maxime Lingjaerde from Lombard & Odier on stage.

Adie from Ramborn Cider

Adie Kaye and Ramborn Cider are working for reviving the culture of cidermaking and replanting traditional meadow orchards throughout Luxemburg.

Steffen from B Corp

Steffen Kallehauge from B Corp walks the audience through B Impact Assesment.

Odette from Aliter

Aliter Networks’ goal is to have half a million IT products reused by 2025, explains Odette van Zijdveld.

Catherine from Kraft

Catherine Stenholm and Kraft Group are making a change in the professional Swedish skin- and haircare distribution segment.

 

Using business to fix our future

We attended the fourth European B Corp Summit – the gathering of purpose-driven businesses – on the 23rd and 24th of September. Almost 700 people from 23 countries attended two days of inspiring panel discussions, workshops and networking opportunities in Amsterdam. The event was organized by the non-profit B Lab Europe which helped HCP get certified in 2017.This was the third time we took part since becoming a B Corp. We could see that the B Corp network is becoming bigger and their message of balancing purpose and profit louder.

#LeadtheBeat

Businesses have a responsibility to work together to build a more inclusive economy and B Corps are at the forefront of this movement.  We are proud to be a part of this movement as the first B certified company in Finland.

Messages from the B Lab and other B Corps

Jay Coen Gilbert, co-founder of B Lab and the B Corp movement declared: “We don’t have much time left to make sure we can preserve our home not just for us but for future generations. […] Incremental change is insufficient, individual change is insufficient. We need systemic change”.

A systemic change may be hard, but we have seen some promising initiatives lately. In September, the Financial Times declared it’s time to reset capitalism. They are examining a model of free enterprise capitalism that does not focus on maximizing shareholder value under the heading of the ‘New Agenda.’  

The Business Roundtable, an association of CEOs of leading US companies including Apple and JP Morgan Chase, announced in the New York Times that they are committed to lead for the benefit of all stakeholders.

This is also our mission and the mission of the B Corp movement. But what we need now is action beyond nice words. We need to walk the walk – as it appeared in the response by a group of B Corps to the above NYT piece.

B Corp letter to the Business Roundtable

Some of our B Corp friends like Patagonia and Ben & Jerry’s have hit the streets to support climate strikes. “We need to stand out because with more heads, it will become easier to build a more sustainable future. This is the power of the B Corp community,” stated Anuradha Chugh, Managing Director at Ben & Jerry’s.

Some other B Corps work within their line of business.

What is the role of finance?

In the summit, we were happy to see many other financial service providers that have joined the B Corp movement. Some are seeking to build a better future by directly financing companies and innovative solutions for a more sustainable tomorrow.

We were especially pleased to meet people from a Swiss private bank, Lombard Odier, that got B certified earlier this year. They have been in business for more than 200 years, and surely know something about sustainability in finance.

Their Head of Corporate Sustainability, Ebba Lepage stated that: “We see our role as a thought leader, leading the change. […] We invest in sustainable business models because we believe they do good for the world and have good business models that will last.”

At HCP, we want to be a part of a more sustainable future by leading the change we want to see within the financial service industry.

“We believe HCP’s way of operating as a business can demonstrate how an asset manager can be responsible. It is not just about launching green bonds and ESG funds. We emphasize having a high standard on governance and we disclose what we do – from how much tax contribution we make to the company’s pay structure. If we cannot be a responsible business ourselves, how could we preach others to be one,”  stated Jo Iwasaki from HCP. 

We would like to believe that we demonstrate to the world that the financial service industry can be a force for good.

Leading the beat of purpose-driven business 

We believe that the B Corp movement is one of those initiatives that carries a promise of a more sustainable tomorrow. We wish to encourage more business leaders to think about their mission and contribution to the wellbeing of the world by promoting the idea of B Corporation at Slush, that is, the leading tech start-up event in the Nordics.

We host an afternoon event on 22 November at Mesukeskus, attached to Slush but not within the main area, so you don’t need a Slush ticket to join us. At this event, we will have a presentation by B Lab, a couple of B Corps to share their experience of getting certified and what it brought to them, followed by a self-assessment session.

If you wish to know more or attend, email our investor relations at ir@hcp.fi.

We will follow this by a networking event (’HCP lounge & sauna’) back at the HCP office at Kaapelitehdas/Cable Factory, where we can continue discussions on the topic.

Telling HCP’s B Corp Story

B Corp Summit attendees taking a break in between workshops

At B Corp Summit in Amsterdam, I was asked what problems I face when telling my company’s story. In my work at Helsinki Capital Partners (HCP), I try to tell people that the way their financial service provider does business really matters. And most of the time nobody cares.

The financial sector has a bad reputation for a reason. It is known for incentives encouraging short-term thinking, irresponsible processes, and hierarchical management. In addition, financial products and services are often very complex, they carry hidden costs and they might not even be in the clients best interest.

This is a problem within the industry. How you treat your clients, workforce, and how you give back to the society are questions that have to be answered within any given company.

We have thought of these questions carefully, and our answer is not to be a prick.

Not being a prick in our line of business includes committing to transparency. It is self-evident for us that clients are told how much they pay both directly and indirectly to us for our service. We focus on the best interest of our client, which is why we have eliminated all short-term incentives, such as staff bonuses, from our company.

The #BCorp certification makes our business even more transparent. Moreover, it encourages us to consider our impact on all of our stakeholders.

We operate as a limited liability partnership, where all the permanent employees own a share of the company. They will prosper if the company will. On the other hand, if the company would go bust they would lose their money. This is the healthiest incentive for employers long-term thinking we can imagine.

The shareholders are important for a company. However, they are only one stakeholder group to take into account. This is as obvious to our company as it is to all of us as individuals. A life where you only value a high salary and fat dividends is a poor one. We want more!

Meeting people from other mission-driven companies is always inspiring. They are ready to #leadthebeat of human-faced capitalism, where businesses balance purpose and profit.

They care.

Thank you all who made it to #BCorpsummit2019! It was great to hear your stories and share ours.

 

Best for the World: Workers – HCP honored by B Lab

The asset management company Helsinki Capital Partners (HCP) has been honored by B Lab for its way of working, which takes into account unusually widely employees’ interests.

HCP is praised for its unusually small pay gaps between employees and for having all permanent employees own part of the company.

Communications and customer experience manager Miika Koskela bought a partnership stake in the company in spring after working at HCP for two and a half years.

”I invested in the opportunity to eat the fruits of my labor. Now that I own HCP shares, I am even more interested in the sustainability of the business and the value it creates for owners, employees, clients, and the society around us.”

Communications & Client Experience Manager Miika Koskela

HCP is also honored for its low hierarchy and openness in the work community. All projects that go on in the company are logged into its intranet, which all employees have access to. Anybody in the company can start a project whose cost is less than 10,000 euros without a supervisor’s approval.

Employees are encouraged to manage themselves. Nobody’s working hours are supervised and remote work is always allowed

Pasi Havia, an HCP portfolio manager with a background in the IT sector has made use of remote working by having his office first in Spain and now in Estonia. He considers free working hours self-evident.

”If I dug ditches for a living, keeping track of working hours might make sense – in the IT sector, not so much. Bad code does not become better by throwing more hours at it. This applies to all knowledge work.”

Pasi Havia

Fund Manager Pasi Havia

In 2017, HCP was the first company in Finland to receive B Lab’s B Corporation corporate responsibility certificate. B Corporation companies are profit-seeking firms with a mission. They seek to take into account all stakeholder groups – not just the company’s owners.

”You might compare a company to an individual person. If the entire purpose of your existence is to make profits, your life is rather poor,” comments HCP’s CEO Tommi Kemppainen.

Tommi Kemppainen

CEO Tommi Kemppainen

B Lab, B Corp, and Best for Workers

The non-profit B Lab grants the B Corporation certificate to companies who meet extremely stringent environmental, societal, and governance criteria. The world has 3,000 B Corporations in 64 different countries and in 150 different branches of industry.

B Lab honors 10% of certified companies who take into account their employees and other stakeholder groups particularly well. HCP has already been named two years in a row as best for workers.

”Best for Workers honourees have an exceptional corporate culture, work environment, worker health and safety practices, ownership and compensation policies, and other employee-centric practices. Companies like HCP represent the kinds of impact-driven business strategies that are inclusive, regenerative, and delivers value to all stakeholders, not just shareholders,” comments Anthea Kelsick from B Lab.

The list of all honored companies: bcorporation.net/2019-best-for-the-world/