CAN Conscious Investors Learn From "The Modern Day OGs of Wall Street?"

I feel obligated to start off with two confessions and both may require sacrificing any street credibility I thought I might still have. The first is that when Vinay Shandal referenced ‘The Modern Day OG’s of Wall Street’ in his recent Ted Talk, I had no idea what he was talking about. After several failed searches I finally stumbled upon what I was looking for over at the Urban Dictionary.

The second confession I need to make is that I was turned on to this incredible talk by Shandal by the very last person I would have expected; my Mother. I was so convinced that anything my mother sent me on shareholder activism couldn’t be any good that it took me over a month to listen to the link she sent over. I’m still not sure if this surprise is a testimony to the fact that my Mother has been more carefully listening to my rants on modern corporate agency problems or a testimony to Vinay Shandal’s ability to inspire and engage with his audience. In either case, I’ll be paying closer attention when my Mom tells me to take a listen.

While Shandal correctly points out that current efforts by conscious investors to effect corporate change have generally born very little fruit, he’s misguided to suggest that conscious investors can adopt the playbook of activist investors. This is best understood in the case of Whole Foods where Jana partners amassed $794.5M to build a 9% stake in the stock. If it weren’t for Jana’s large and liquid checkbook, Whole Foods CEO, John Mackey, wouldn’t be an Amazon employee today.

And it’s not just money that activist investors bring to the table. The most successful activists know when to push leverage, dividends, spin-offs, mergers and proxy battles to create a quick profit for shareholders. While ESG factors add verifiable financial value, this more sustainable value is reaped over the long term. If ESG factors offered quick returns akin to those sought by the ‘Modern Day OGs of Wall Street’, Shandal wouldn’t need to be giving a Ted Talk to convince them to do this.

Instead of going the Gangster path, let me suggest a more productive solution. Conscious investors could leverage their values more powerfully if they were better organized. The best example of this potentiality comes from the work of two shareholder advocacy organizations.

The first is the non-profit As You Sow which is based in Oakland, CA. One example of As You Sow’s work is their report on the 100 Most Overpaid CEOs which not only identifies CEOs with long track records of underperformance, it also highlights those mutual funds and pension funds that continue to blindly support them. As You Sow helps investors know how to vote proxies and leverages the use of shareholder resolutions to bring concerns over executive compensation, antibiotics use and climate change to the attention of corporate management.

A second shareholder advocacy group that deserves recognition for its education and coalition building efforts is the Inter-faith Center on Corporate Responsibility (ICCR). ICCR has a long track record of mobilizing hundreds of institutions to support economic and environmental justice. For example, in 2017 ICCR founded the Investor Alliance For Human Rights which draws attention to the horrors of modern day slavery. Like As You Sow, ICCR members represent foundations, non-profits, faith-based institutions and private family offices.

If conscious investors want to get serious about more responsible investment practices, they will need to be better organized. I urge investors of all sizes to consider connecting to these coalitions and supporting them with the previously unexamined profits of their portfolios.

While invoking gangster-like fear in the halls of Wall Street is an inspiring idea, conscious investors will be more successful by adopting a more collaborative playbook. This begins by making a commitment to join and support those organizations that are building coalitions that speak for and with investors who promote environmental and social responsibility in all profit seeking endeavors.

Photo by Pawel Janiak on Unsplash

Matt Illian