Guest Contributor Eventide Asset Management, LLC, is a Boston-based investment adviser pursuing “investing that makes the world rejoice®.” Founded in 2008, Eventide’s vision is to serve individuals, financial advisors, and institutions by seeking to provide high-performing investments that they believe create compelling value for the global common good.
Investing is a powerful tool.
Publicly-traded companies like Google, Facebook, Twitter, and Netflix to name a few have had massive impacts on shaping our world. How many billions of hours do people spend on YouTube and Netflix? And how many ideas have been shaped through Facebook and Twitter?
Indeed, investors have unimaginable power at their disposal to create and support institutions that have the potential to change our world. The question then becomes “What kinds of changes do we want to effect in our world?”
Investing During Apartheid
Let’s look at a positive example of world change brought about through investors.
In 1971, several Christians had a concern for the apartheid taking place in South Africa. “Apartheid” is the Afrikaans word for separation (“apart-hood” is the literal derivation). Apartheid in South Africa was similar to Jim Crow segregation in the U.S., where the black population was segregated from white populations and subjected to unequal treatment.
By the early 1970s, the local government of South Africa had already ignored multiple sanctions and embargoes from the United Nations. Given that the local government had thumbed its nose at the standard ways that other governments tried to apply pressure, change appeared unlikely.
That was until a group of Episcopal investors filed a shareholder resolution with General Motors (GM), who had operations in South Africa. Many people believe this to be the very first example of modern shareholder advocacy in history. In essence, through the resolution, the group of Episcopals said, “Okay, we’re not going to try to go through politics and government, but we’re owners of GM, and we’re going to use this power of investing to bring about change.” As investors, they had the right to file a shareholder resolution with GM.
To do this, they employed the help of Leon Sullivan, a black Baptist minister and anti-apartheid activist from Philadelphia. Sullivan was passionate about Apartheid because he himself was discriminated against growing up under Jim Crow segregation.
And so, Sullivan worked with these Episcopal shareholders to draft a specific set of proposals for GM on what they should do in response to the injustice of Apartheid. They called the specific proposals “The Sullivan Principles.” The principles included things like equal pay for equal work, desegregating bathrooms and water fountains, equal working conditions, and the like.
GM ended up adopting “The Sullivan Principles” and actually brought on Leon Sullivan to their board of directors. Then, after GM’s adoption, Ford and Goodyear, who also had operations in South Africa, followed suit. And so, one by one, like dominos, companies began changing their workplace practices in South Africa, resulting in sweeping changes.
As a result, many would argue that shareholder pressure was one of the key instruments, if not the key instrument, in the fall of Apartheid.
Using this Power Today
So, what about today? How do we use this incredible power we have as investors to shape our world today in beneficial ways?
One way is by investing in companies that are meeting real human needs. Whether it is the need for clean energy, clean water, or treatments for some of the world’s most debilitating diseases like schizophrenia, investors have the power to impact both what a company does and how they do it.
This means of investing is sometimes known as values-based investing. In short, values-based investing is the simple act of aligning one’s values with their investments.
Values-based investors begin by asking the question, “What kinds of companies do I want to own?”—which then leads them to consider the following three aspects of company ownership:
- Avoid: avoiding investing in problem areas,
- Embrace: positively investing in companies serving important needs in the world today, and
- Engage: engaging companies on specific issues
As investors, we have the unique opportunity to create blessing in our world through the ways we invest.
Imagine the change we can bring about together by taking responsibility for the companies we own, choosing to avoid companies that are doing harm and instead embracing those that promote human flourishing.
Investing is important; it truly can be a powerful force for good.