As a consumer you have buying power and how you buy can influence a company. As an investor you have some choice in investing or investing in things you do not like. This does not mean the companies you do not like do not have access to capital, but it does mean there are likely others with the same goals as you. All public companies have annual general meetings, they do not have to be over in 10 minutes, they can last until the business is done. Depending on how many votes you can bring, management at least has to have an opinion on the issue or issue a public opinion. That can lead to other actions.
In an article by Paul Sullivan of the New York Times News Service, he looked at social investing and how to do it. Some people avoid the sin stocks – alcohol, firearms, tobacco and the list can go on. Understanding some companies because of their size and complexity they are hard to avoid because they deliver consistent returns year and year.
Allocating capital is a expression of belief, starting with the belief the investment is going to grow over time. It can also be a means to force, support or accelerate change within an organization.
Erika Karp, founder of Cornerstone Capital said companies are on a continuum: they are good at some things but not everything. If you want change, what do you want and try to be consistent. Sometimes you are looking for a company that is in of turn around with new management, change is easier but are you gaining the returns you expect? If a company says they are for racial justice, does the senior management reflect that. (for many years, women in companies knew glass ceilings, what other glass ceilings are there?)
Some managers apply best in class, if you do not like the fossil fuel companies, even the best run oil companies still use fossil fuels as there base operations. If you prefer to not to be in fossil fuels, you will be invested in them. If you do not mind, then you should be invested in the best oil company of the group.
In banking everyone examines the fee business (it has grown) in a municipality similar to Ferguson, Missouri fees amount to 25% of the budget. Most of the fees came from minor offences such as broken taillights and jaywalking. The national average is 2% from fines. If you lived in Ferguson you would be fined for something during the year, would you like it? how do you change the system?
Linking to dividend paying stocks, there are some stocks there are seemingly very easy to own because they seem to do the right thing most of the time. An example is an utility – deliver the lights to your home, on the surface there is little controversy in the company. The company hires people who live in the area to ensure the lights go on and bills collected, likely their workforce reflects the city. If not it should. The issue for the utility is does the regulator increase the rates every year? If yes, then as long as the utility does not spend money foolishly they should generate the income to pay dividends. The method of generating electricity will depend on price – natural gas is less expensive than coal, switch to natural gas. In addition natural gas pollutes less which is a good thing. You have two killed two birds with one stone. There are flaws with most companies, but flaws can be changed – the issue is the change to your liking?
There are more than questions than answers, till the next time – to raising questions.