The new federal government stance toward deregulation may lead many companies to roll back operational practices, potentially resulting in higher profit margins.1 However, shareholders may have a say in this decision.
As deregulation spreads throughout the nation, impact investing also is becoming a popular trend among shareholders. Many investors don’t want to simply have the opportunity to accumulate earnings throughout the long term — they want the money they invest to do something meaningful as well. Some companies are positioned to use their products, services or innovations to advance environmental initiatives such as clean energy, water and transportation.2
Impact investing also relates to social and governance issues, so investors seeking an impact aren’t limited to the “green” sector. For example, Forbes published a list of America’s best companies for diversity — employing ethnic minorities, women and older workers — and reported that corporations with a diverse workforce tend to see strong financial performance. That’s good news for investors.3
Of course, many startups have an idealistic vision of their goals. However, as investors, we need to be vigilant about how we invest our hard-earned money to ensure we are working toward our personal financial milestones as well as philanthropic goals.4 Whatever your personal or philanthropic goals are, remember that we’re here to create financial strategies using a variety of investment and insurance products to help you pursue them. Please give us a call if you’d like assistance.
While company decisions and operational practices are not always evident to shareholders, the news media has proved effective at holding their proverbial feet to the fire. For example, last year’s leak of the “Paradise Papers” revealed how many multinational organizations such as Apple, Nike and Facebook have used complex structures to shield revenue from taxes.5
Investors can influence company decisions toward societal sustainability by becoming actively engaged in shareholder meetings and supporting clear communication via public transparency and disclosure. Regardless of sector, businesses will generally respond to social accountability in how they operate and are perceived by customers, clients, vendors, employees, shareholders and the public at large.6
Customers also can show their support or disapproval in company decisions. Throughout the last year, we’ve seen highly effective boycotts as consumers use their buying power to wield influence over companies, advertisers, media outlets and politicians. In some cases, customers and shareholders have been able to move the dial on corporate adoptions of many contentious issues even faster than the government. For-profit companies will always be concerned with their bottom lines.7
1 William Dunkelberg. Forbes. March 23, 2018. “Why Deregulation is Important.” https://www.forbes.com/sites/williamdunkelberg/2018/03/23/why-deregulation-is-important/#26cdcb401c18. Accessed May 4, 2018.
2 Knowledge@Wharton. Jan. 23, 2018. “How to Drive Competitive Returns with Impact Investing.” http://knowledge.wharton.upenn.edu/article/backstreet-wall-street-episode-02/. Accessed May 4, 2018.
3 Jeff Kauflin. Forbes. Jan. 23, 2018. “America’s Best Employers For Diversity.” https://www.forbes.com/sites/jeffkauflin/2018/01/23/americas-best-employers-for-diversity/#7c0ad2787164. Accessed May 4, 2018.
4 Christopher P. Skroupa. Forbes. April 17, 2018. “Shareholder Influence On Impact Investing.” https://www.forbes.com/sites/christopherskroupa/2018/04/17/shareholder-influence-on-impact-investing/#77583f45352a. Accessed May 4, 2018.
5 Nick Hopkins and Helena Bengtsson. The Guardian. Nov. 5, 2017. “What are the Paradise Papers and what do they tell us?” https://www.theguardian.com/news/2017/nov/05/what-are-the-paradise-papers-and-what-do-they-tell-us. Accessed May 4, 2018.
6 Principles for Responsible Investing (PRI). April 26, 2018. “Executive summary.” https://www.unpri.org/esg-issues/how-esg-engagement-creates-value-for-investors-and-companies/3054.article. Accessed May 4, 2018.
7 Knowledge@Wharton. Dec. 1, 2017. “Does Your Product Boycott Really Matter?” http://knowledge.wharton.upenn.edu/article/paradise-papers-proved-almost-impossible-vote-dollar/. Accessed May 4, 2018.