Some investment strategies come with a change-the-world bite
by NINA WINHAM
You open the morning paper. You read a story about a company that’s steamrolling a little community somewhere in your own backyard, or halfway around the world. You get pissed off at corporate ignorance, greed, and clout. You get fired up. You plan the choice words you’re going to write in a letter to the company’s CEO.
Then you get distracted. It’s time to make lunches/go to work/help the kids with homework. You put the paper down. You never write the letter.
It’s frustrating, watching big companies do bad things. But don’t get mad. Get invested.
You probably know about socially responsible investing, where you buy stock in companies based on the way they handle social, environmental, and governance issues, as well as their financial performance. The way you (or your mutual fund advisor) pick stocks today helps build the world we’ll live in tomorrow.
But there’s more. When you choose socially responsible investing, you unleash a bunch of social change watchdogs. And unlike most of us who can’t squeeze “lobby corporate CEOs” onto our to-do lists, they do get around to writing those letters.
It’s called shareholder advocacy, one of the principal tools in the socially responsible investment world. It means the owners of those mega-companies (which is all of us, if we own stock) take an active role in what the company is up to. Sometimes, just requesting action on an issue can work. If it doesn’t, there are shareholder resolutions: socially responsible shareholders file a resolution that has to be voted on by all owners. Along the way, the media gets wind of the situation, the public is educated, and the company must make a very visible decision to mend its ways—or publicly declare that it won’t live up to standards that some of its owners expect.
Socially responsible shareholder resolutions are used to address all sorts of practices, from corporate governance to climate change, from pollution to labour practices. Ultimately, they protect the bottom line, too; it’s becoming clearer on this small planet that bad behaviour today tends to result in poor financial performance down the line.
PepsiCo has been the target of a number of shareholder campaigns over the past few years. One targeted its practices concerning community water supplies near a bottling plant in India. Another was aimed at having the company use more recycled plastic in its bottles. Yet another was part of a large movement to have multinational companies assess the impact of HIV/AIDS on their bottom line—a way to raise the profile of the disease and its impact on communities around the world.
The result? PepsiCo is now a leader on an increasing number of social responsibility fronts; visit their corporate web page (pepsico.com) for a sample. The company is advocating for a U.S. program to reduce greenhouse gas emissions, has aggressive conservation and efficiency programs in place, and runs mentoring programs aimed at increasing minority hiring. Quite simply, Pepsi has realized at least some of its owners really care about this stuff—and they’ll raise a ruckus if the company shows it doesn’t.
Your investment company makes money from you. When you choose socially responsible investing, some of that money gets turned into action: it funds watchdogs with an international bark and a media-savvy bite. You get financial returns—and the satisfaction of knowing the letter’s already in the mail.
Nina Winham is principal of New Climate Strategies, a consultancy focusing on sustainability, communications, and business strategy (newclimate.ca ). She loves writing letters, but has a hard time remembering to take them to the mailbox.
