Investing as a Social Change Strategy

By JOE KEEFE, President and CEO of Pax World Management LLC

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I imagine that most people are as frustrated as I am by the current state of world affairs.

Climate change, terrorism, war, poverty, growing inequality, refugee crises, debt crises, horrific human rights abuses…the list goes on and on. The world has always had its share of problems, of course, but today there seems to be a growing sense that things are getting worse and that perhaps we have lost some degree of control over the march of events.

Another defining characteristic of our age is that many people have lost faith in the ability of public institutions to address the challenges confronting us.  The public sector simply isn’t what it used to be, for various reasons in different parts of the globe – just look at the partisan gridlock that has brought our own government to a standstill. 

We live in a time when people are less optimistic, more cynical and have lower expectations, in part because they see government and other institutions as ineffective and unresponsive. 

Of course, the challenges we face today are as solvable as any problems we have confronted in the past – think of slavery, civil war, Apartheid, women’s suffrage, the Great Depression, two world wars, the struggle for civil rights.  We can do this.  We as individuals still can make a difference.

How?

Well, one way is through our investments.

We don’t have to wait for governments to take action. We can actually increase our influence over world events, and potentially have a greater impact (and feel a little less powerless) not just through civic participation, or voting, or supporting non-profits – all of which remain vitally important – but through our role as investors.

Investors can promote positive social change.

All of us have the opportunity to invest in ways that seek to ensure that corporations, and markets, produce better outcomes on key social issues. 

How can investors do that? Let’s take a look at gender inequality as an example.

If you believe women should be better represented in the business world, you can put your money to work by investing in funds that in turn invest in companies that promote gender equality and women’s leadership. You can send a message to companies, through your investments, that women’s leadership is valuable and that gender equality is critical to business success.

You can also stop rubber-stamping all-male corporate boards. At my company, we won’t support any board slate unless it includes at least two women.

You can engage the companies you own to improve their gender diversity policies. For example, over the past few years Pax World has filed or co-filed board diversity proposals at eight companies asking them to adopt gender diversity policies for their boards. In 2015, three of those companies announced female director appointments.

Take another example - climate change - where investors have similar opportunities to make a difference.

Rather than investing in fossil fuel companies, you can invest in energy efficiency and renewable energy; clean water and pollution control; sustainable food and agriculture. You can avoid investing in companies involved in the most carbon intensive fuels, as we do at Pax World, and instead invest in high-impact companies whose products, services or business strategies directly address climate change and other global sustainability challenges.

You can also participate as active shareholders and engage companies to reduce greenhouse gas emissions and mitigate climate change. Again, at Pax World we have filed numerous shareholder resolutions calling on energy companies to publish annual sustainability reports and set quantitative, time-bound goals for reducing greenhouse gas emissions.

The bottom line: As investors, we have more power than we realize.  We can prod and pressure and cajole companies into doing the right thing.  Unfortunately, too many of us fail to leverage this power.  

Right now, when it comes to vital issues like climate change and gender equality, most investors are still on the sidelines. In my mind, this is the equivalent of a voter who doesn’t show up at the polls to vote. It is shirking responsibility.  It is forfeiting the opportunity to make an impact. 

Investors are not powerless.  We can move the needle. 

And when it comes to the state of our world today, it seems to me that it is both a moral imperative and an economic imperative that the needle be moved.   

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Joe Keefe is President and CEO of Pax World Management LLC and Pax Ellevate Management LLC. Under Joe’s leadership, Pax World has become one of the leading innovators in the rapidly growing field of sustainable investing. He is Co-Chair of the Leadership Group for the Women’s Empowerment Principles, a joint program of the United Nations Global Compact and UN Women, and was honored at the United Nations with the Women’s Empowerment Principles Leadership Award in 2014. In 2015, Joe was recognized by Ethisphere Magazine as one of the “100 Most Influential People in Business Ethics” and the Financial Times named him one of its 10 “top feminist men,” for helping “women succeed in business and beyond.”      

 

 

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