How to Make a Difference Through Your Investments
Investing. We know it’s important to saving and (hopefully) making money. But did you know it can also be an effective way to advocate for family supportive workplace policies? Today I’m thrilled to have Chris Flores, Founder & Lead Planner at Three Corners Capital AND dad-to-be, break it down for us.
“They” say that when speaking or writing it is important to “know your audience”. My guess is, that if you’re reading this, I don’t need to build the case for the existence of inequality and unfair labor practices in the workforce here in the United States and around the world. Instead, I’ll focus my efforts to communicate how to engage companies, especially those publicly traded, to influence company policy.
TO START, AN IMPORTANT INVESTING PRINCIPLE
One method for businesses to raise capital is to issue stock certificates. A stock certificate is an instrument evidencing ownership of a corporation. These “stocks” are then traded on exchanges to provide a marketplace for owners or potential owners. One of the benefits of being an owner is that you have a say in company matters.
SO WHY DOES OWNING COMPANY STOCK MATTER?
Well, ideologically, ownership represents an outward representation of one’s interest, involvement and support of an organization and all that comes with it. More important to my example, however, is that one common method for investors (owners) to influence their return on investment is to take an active position in a company by owning a large number of shares. This is called share owner advocacy. Oftentimes, these advocacy efforts are intended to influence board elections, cost cutting measures and other methods to grow the business. However, we can also use our ownership and advocacy to engage companies on their environmental, human rights and governance practices.
HOW CAN THESE EFFORTS IMPACT GENDER EQUALITY AND INFLUENCE AREAS LIKE FAMILY LEAVE?
Research (see here, here, and here) has demonstrated that when companies invest in women and evaluate gender equality as a part of their business plan they outperform their peers in a variety of categories. Many reasons for this have been identified such as the value of diverse thinking, better employee retention and engagement, lower turnover costs and higher productivity.
Engaging companies to support equality is not just a box to check off. Not only can it lead to better performance, if a company has women serving on the board and in executive leadership positions, more influence exists from people that actually understand what it’s like to have a child, and, therefore, have a better likelihood of promoting/supporting policies impacting family leave.
"Engaging companies to support equality is not just a box to check off."
Oftentimes, shareholder resolutions are submitted because the company’s management would not otherwise support the initiative – hence the submission and subsequent vote. Some resolutions are successful and some are not – but at a minimum the resolutions become visible. Without shareholder advocacy, the primary method for non-shareholders to raise awareness or cause a company to change behavior/outcomes is through protest.
While protests can be effective, shareholder advocacy utilizes the role of a publicly traded CEO to maximize the value of the entity that, in turn, benefits the shareholders. Through this type of advocacy, value can be demonstrated. Opportunity for financial gain as well as positive environmental, human rights, and governance outcomes exist.
HOW CAN I DO THIS?
For many individuals, it may be hard to amass enough wealth to own enough stock in any one company to engage in shareholder advocacy efforts alone. To achieve a large enough ownership, many people are partnering with investment companies through mutual funds that are focused on environmental, human rights and governance criteria – including gender equality as an investment concept. This ownership allows individuals, through the large institutional investors, to partake in active engagement.
Research (see here, here, here, and here) has demonstrated that investors looking to align their values with their money are not forfeiting their ability to achieve market rate return. As such, if issues of equality are important to you, I would encourage you to consider becoming a conscious investor.
Three ways to become a conscious investor or actions you can to take to support conscious investing:
Inform yourself – organizations like US SIF – the forum for sustainable and responsible investment – help promote awareness and advocacy through individual and institutional engagement. If gender lens investing is intriguing, check out Pax Ellevate. You can also learn more about various gender equality investing considerations here.
Don’t be a bystander – continue to partner with The Breeding Ground and like-minded organizations to effect change. Also, be a voice for change at work. If your company offers a retirement plan, engage the benefits manager and/or investment committee to offer investment options in the plan that provide socially responsible screening like gender equality.
Take action – if you have investments like an IRA or Roth IRA etc. ask your advisor about how you can engage in this type of investment activity for at least a portion of your strategy. You can also inquire with Three Corners Capital to see how we might be able to help.
About: Chris Flores is a registered representative and investment advisor representative with Lincoln Financial Advisors Corp., a broker/dealer and registered investment advisor offering insurance through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this material as it relates to your personal circumstances. Three Corners Capital is not an affiliate of Lincoln Financial Advisors Corp. CRN-1658749-120716
Thanks for making a complicated topic much more understandable, Chris! We’re so inspired by how you’ve combined your profession and passion in a way that’s making a difference for U.S. families.
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