Can big investors save the world?

Interesting story here. At the moment some companies are paying lip service to appease investors, and ethical is good PR.

Not sure it’ll ever be close to a priority for the big established companies, but possibly it will for the next generation

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This is what Larry Fink wrote to all the companies’ CEOs on this subject:

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Society is increasingly looking to companies, both public and private, to address pressing social and economic issues.

I think he makes many great points but this one stands out. People don’t look to governments for leadership on these issues anymore

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Which is why people wanted to give Trump a chance

Don’t start me on Trump. That’s more to do with the cult of celebrity imo

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Seems he’s not alone in his thinking

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So is this man

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So I work for one of the largest asset managers in the world and we take this really seriously as our ethos is all about inclusive capitalism. We take an increasingly activist investor stance, and have excluded a number of companies from our funds because we don’t believe in their attitude to ESG.

We also got invited by the pope to go to Vatican City together with the other 10 largest financial and energy companies in the world, to discuss the role of big corporate with regards to societal and environmental issues.

Unfortunately I wasn’t invited, that’s well above my pay grade. :joy:

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If nothing else this debate is giving people plenty to write about

However well-meaning, this new form of collective capitalism will end up doing more harm than good. It risks entrenching a class of unaccountable ceos who lack legitimacy. And it is a threat to long-term prosperity, which is the basic condition for capitalism to succeed

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My personal view: collective capitalism = group think => lack of responsibility => lack of good decisions => no decisions at all => fail

Traditional hardware / tech companies in Japan are good examples.

Your company’s name speaks to this itself :smile:

In order to do ESG really well, companies need long term patient capital. This is why I think Larry Fink’s letter is spot on.

He did get himself into debates of whether his passive funds can actually tell companies what to do, ACTIVELY.

I agree, hence why my company is very much into long term patient capital. And we don’t invest that willy nilly, but where we can expect a good ROI but also do good: inner city regeneration, build-to-rent properties, affordable housing, renewable energy, future city technologies, private equity to we scale up the UK’s startups, SME financing, care homes, etc.

Besides that, ESG is high on our priority list. The problem with ESG though is that there is not a clear industry standard, so asset owners end up comparing apples with pears and do not know whether they get the best outcomes.

It is also often poorly communicated to asset owners, in ways that don’t resonate with them.

On top of that, the industry hasn’t quite made up their minds yet if it’s a “hygiene” factor that comes to be expected, but doesn’t drive more benefits (eg inflows, revenue, retention, etc) or if it’s a genuine value add that asset owners will actively seek out.

My company doesn’t wait for the industry to make up their minds and positive results can be seen. One of the companies we excluded from our funds is one of the world’s biggest oil companies, and subsequently their CEO mentioned to our chairman that it was a shock for their company, but really lit a match and made them rethink what they are doing. If they follow through is another question, but companies will be increasingly aware that there are repercussions to their actions.

So, yes, I am a firm believe that big asset owners or managers can be a force for good.

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emphasis mine

This immediately made me think of Woodford’s fund :sweat_smile:

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Hah. Heaven forbid. Nope, it’s not that one.

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This is arguably where active investing can justify its value-add the most these days

Shai works for one of the more innovative InsurTech companies called Lemonade.

I hadn’t heard of B corporations before, the Ben & Jerrys endorsement will probably help give this initiative a good boost though.

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B Corp was something Monzo were exploring last summer but I haven’t heard anything about that since

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I originally heard about it from Bulb, which is a B-Corporation.

From what I recall, Dan Lyons Lab Rats book from last year mentions B Corps as well.

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did a quick search on their website: https://bcorporation.uk/?gclid=EAIaIQobChMIqonRm7mg5AIVV-DtCh3DBwMzEAAYASAAEgIaQ_D_BwE

didn’t find the large firms like Alphabet, Microsoft, Apple on their certified list…hmmm

I do believe large firms should take the lead on such initiatives, and even fund the smaller firms for annual membership fees and the like

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Just picked up this negating piece by WSJ on Dimon’s new initiatives, calling it “socialist”: