Jamie Audsley and George Hammond – from ShareAction’s Education and Organising team –argue that in order to do good, we must take responsibility for our investments
Businesses have a huge impact on the world, from the factories that produce our clothes to the financial institutions that trade stocks and shares. The public is massively invested in the commercial ecosystem; every time we buy our groceries, or make a payment into our pension funds. ShareAction works to train citizens how to control their investments and direct them towards positive, socially responsible causes and recognise the power that they, as investors, hold. They believe that Responsible Investment is the best way of influencing companies to Do Good in the world.
A recurring theme of the discussion to date has been how the sector can both use its power and build the power of the communities it supports, to influence the world of finance to create more social value. At ShareAction, we campaign for Responsible Investment, helping everyday savers and social sector organisations with pensions and investments to influence the companies that they are invested in. Through our work to build an educated movement of savers we’re successfully influencing the behaviour of powerful institutional investors: pension funds, retirement plans and fund managers. In turn, these investors can influence the behaviour of corporates, shifting us towards the vision of “good” we’re all aiming to deliver.
Responsible Investment is about recognising that the impacts of businesses on the environment, on workers and on communities can seriously affect the value of our investments in them. How so? Poor environmental performance may result in compensation claims and costly clean-ups; exploitative labour practices and poverty wages may affect a company’s brand, reputation, worker productivity and ultimately the price of its shares. Damaging recent examples include SportsDirect’s treatment of its workforce, BP’s Deepwater Horizon disaster and the Rana Plaza factory collapse in Bangladesh – all of which hit companies’ bottom lines. For a firm to fail to take into account its environmental or social impact as part of its overall investment strategy is both ethically and financially irresponsible.
How exactly can Responsible Investment enable you and the communities and individuals connected work towards a vision of “good”? Well, firstly, as outlined above, the power of the investment system is significant. Fifty trillion pounds is invested in the companies that we buy from, that employ us, and that shape the world we live in. Wherever we look, the investment system has a huge impact. And, crucially, much of the money it invests is ultimately owned by us: employees in social sector organisations. That means we have a stake in how it is spent and should take an interest in investing it to genuinely do good.
we view action within the investment system as the new frontier of democratic participation
Secondly, as millions more of us become investors (it is estimated that by 2018, the number of UK pension savers in an auto-enrolment scheme will have grown by 9 million) we view action within the investment system as the new frontier of democratic participation. The movement of financial capital has a significant impact on the world, and organising our social sector and personal investments is one way we can reclaim our power to influence it. The opportunity before us is to seek a relationship with the market, to hold it to account and to organise capital, ensuring it delivers our values, and has tangible positive impacts on the communities we are connected to. Our sector – seeking to support and sustain resilient communities – must look to nurture a growing community of organised and resilient savers.
Finally, Responsible Investment should be understood as a way to protect your and your supporter’s investments, as evidence builds of its ability to outperform the market benchmark.
Unlocking the system
The investment system remains opaque and changing the behaviour of such powerful institutional investors (pension schemes and asset managers) is difficult. But we are changing behaviour in important ways, particularly as involvement becomes ever easier.
Powerful and informed savers
At the heart of our work is a focus on citizen investors taking action. We train and support individuals and teams to engage the investment system, exerting pressure to shift its behaviour. What’s so exciting about this approach is that just about everyone can get involved – if you have a pension that’s invested in the stock market, or own shares, you’re able to galvanise your investor power. To date we’ve enabled thousands of people to email their pension fund calling for action; trained hundreds to positively use their shareholder voice at company AGMs, and are currently building teams of motivated pension holders in over 20 workplaces to directly influence how their pension savings are invested.
The investments of social sector organisations are an important part of the puzzle
Taking action with our own social sector investments is also an important part of the solution. A new approach to your investments might sound daunting, but it needn’t be. One good starting point is to ask your asset managers how they think about your charity’s aims when they approach investment. The questions you ask can be simple – ‘we’re concerned as a charity with issues of inequality, how do you engage with companies on pay?’ – and the answers will be telling. ShareAction regularly surveys the Responsible Investment performance of the asset management industry, and while we think there is a long way to go, more and more asset managers are taking these kinds of issues seriously, recognising both the bottom-line imperative to do so, and understanding that the mission of their client may demand it.
Responsible Investment means contributing more than just financial return towards the charity’s mission. If your organisation exists to reduce inequality and poverty, encourage investee companies to pay staff the Living Wage. If your work incorporates the protection of the environment, engage with companies on energy use, commitment to low-carbon technology investment and plans to reduce greenhouse gas emissions. Becoming part of a group like the growing Charities Responsible Investment Network, means ShareAction can highlight opportunities for the kind of engagement that can show charity investments in a positive light.
Some specific examples
One of the best examples of our work is our support for the campaign for the Living Wage, to which 30 FTSE 100 companies are now committed. In the last few years, firms have told us that the application of Living Wage standards has led to better business performance, reduced staff turnover and enhanced corporate reputations, whilst lifting over 60,000 families out of working poverty. Progress is also being made in getting the FTSE 100 to use 100% renewable electricity in their operations and signing up to greater transparency on their approach to tax (e.g. the Fair Tax Mark). As companies implement these changes they’re telling us that they are seeing their trust with investors and customers improve. As a result we’re increasingly seeing companies taking proactive steps to behave responsibly across their operations and going beyond a ‘lip service’ approach we might once have expected. This speaks to moving beyond CSR, a theme explored in more detail by Dawn Austwick.
In a fast changing, complex world, ensuring our values flow through our money is more important than ever. As being a responsible business is increasingly a competitive advantage, and with the demand from investors only set to grow, we’re looking forward to more businesses taking a lead. So, while it’s relatively early days for this movement, we’re confident it’s going to a vital part of the future effort of doing good.
How much influence can citizens have over the actions and behaviour of corporations? How can Responsible Investment complement other approaches to Doing Good, such as Effective Altruism or Purposeful Business? Let us know your views: write us a blog, comment below and tweet at #FutureGood, @, @