Sometimes it can feel daunting to take on global issues. Voting is important, but sometimes politicians can’t seem to get anything done. CEOs have immense power, but often seem to be driven only by financial gain. If world leaders struggle to make meaningful change on issues like climate change, gender equality, and systemic racism, how can one person make a difference? Sustainable investing is a way to claim ownership, drive the markets, and make corporations accountable to you. Here’s how it works:
Deal In Numbers
Not all major corporations are leaders in sustainability. Some do create products that reduce our negative impact on the environment, some have women in the C-suite, some have good labor standards up and down the supply chain. But all major corporations have positive and negative sides.
At UnifyImpact, we honor the work of NGOs 100% dedicated to making change in a certain area of sustainability. In our personal lives, we love supporting small businesses that treat their employees like family. And we love “impact investors” who finance projects and businesses 100% dedicated to public good. But for our part we decided to deal in numbers. To empower the next generation of wealth holders to create the sustainable future they want to live in, we decided those new investors need the tools to impact the way major corporations do business.
Go Big Or Go Home
Major corporations are not going anywhere. Some are bigger than governments. They have infrastructure and armies of employees, they are part of the fabric of modern society. But the sheer size also means incremental changes go an incredibly long way.
When McDonalds decided to switch from styrofoam cups to paper cups in 2018, 770 million fewer styrofoam cups were thrown out per year. At Amazon, a failure to set adequate workplace health standards now affects one million employees. The scope of the success and failures is too big to overlook. Making change at the corporate level impacts huge segments of society.
Know Your Power
It’s true—some corporations have so much clout and such immense resources they are able to circumvent law and public good. But this doesn’t mean they are accountable to no one. Corporations only reach their position because of their ability to make money. No matter the industry or the politics of the CEO, if that ability comes under threat, corporations change.
Even if you haven’t started investing, you have the power to spend on one product or another and you have the power to communicate to your friends and family about your choices. In the age of social media, you can reach the entire world with a single tweet.
Increasingly, it is becoming clear that all stakeholders (e.g., customers, employees, affected communities, and investors) have the power to determine what factors affect the value of a company. “The Internet has given them agency and a voice in shaping the market’s perspective on—and therefore, valuation of—a company,” Truvalue Labs reports, “This new information and communication landscape ushers in a new era of ubiquitous transparency, and empowers stakeholders with a heightened ability to hold companies accountable for their actions.”
Make Your Voice Heard
It’s old news that the stock market reacts to trends. Imagine a scenario where Tesla announces a new innovation, say opening a new factory in Shanghai. Some investors bet the innovation will increase value and buy shares of the stock. Because there is demand, the value goes up. If the trend is clear enough, investors who didn’t react to the original announcement might buy in to benefit from the rise in stock price. The growth can be exponential.
Because sustainability issues drive perception, they can also drive value up or down. In January 2017, for example the hashtag #DeleteUber went viral after Uber turned off surge pricing while taxi drivers were striking at JFK airport to protest Trump’s travel ban. The company was seen to be exploiting the situation for profit (a governance controversy), and within a few days, hundreds of thousands of users had deleted the app. Shortly thereafter, the CEO resigned, and when the company went public in 2019, “It detailed the need to maintain and enhance its brand and reputation as critical to the company’s future success.”
When a company goes public, it gives up ownership in exchange for capital it needs to grow the business. As a result, publicly traded companies, including their CEOs and boards of directors, answer to shareholders. As partial owners shareholders are entitled to an opinion about how the company functions.
If you own as little as $2,000 of stock in a company for a year, you have the right to file a shareholder resolution. This means that you can file a proposal that will be read by all of the people who invest in that company, considered by the board of directors, and voted on by the shareholders. As You Sow, an NGO that has been a leader in shareholder advocacy for decades often uses shareholder resolutions to drive major corporations towards more sustainable practice. It was one of those resolutions that eventually compelled McDonalds to get rid of the styrofoam cups we mentioned above.
You can make an impact by divesting from companies that are out of alignment with your values, but sometimes you can make an even bigger impact by claiming ownership and demanding better behavior.
Use Your Power for Good
All of this is to say you have more power than you think. You may be just one person, but when you invest sustainably and learn how to make corporations hear your voice, you can change the way they do business. When you make your own lifestyle more sustainable, you do make an impact, but when you make major corporations more sustainable, you have the power to shift entire industries and maybe build the economy and society you want to live in.
Do you want to claim your power and drive corporations towards sustainability? Download our free app and join UnifyImpact today. Want to stay up-to-date on the latest in sustainable investing? Follow us on Twitter, LinkedIn, Facebook, and Instagram!