Pondering the Lessons of These Challenging Times

August 25, 2020

Much has been said about this Pandemic and all the frailties of our nation that have been revealed in the response to it and in the uneven impact that it is having on people worldwide. Those of us in California are facing the immediate threat of fires and toxic air quality in addition to the pandemic.

Our role as financial advisors would dictate that we look at this disruption in economic terms. What are the implications for the economy and how best to get people back to work? The problem with the demonstrations is the destruction of property. Corporations need to have lower brackets to be competitive in the global marketplace. How can we best protect our clients from all this uncertainty?

At the same time, we are struck by the contradiction of the market recovering and those of us with wealth being allowed to maintain a relatively safe existence, mostly in pleasant surroundings while being served the necessities of life by people who have no choice but to risk their lives and the lives of their family in order to serve us.

We can do better. We can insist on a version of capitalism that distributes wealth more evenly; that provides opportunity to people of all colors and is gender neutral, that provides access to health care. These are the “s” factors in the ESG – Environmental, Social and Governance criteria. Since the Covid crisis and the Black Lives Matter unrest, the “s” factors are getting a lot more attention.

We are interested in shareholder activism. Shareholder activism has been around for an exceedingly long time, its origin being in the financially motivated realm of mergers and acquisitions and hostile takeovers. In 2016 and 2017, 75% of proxy ballots were focused on short‐term interests, i.e. corporate performance, immediate financial results, and shareholders’ interests exclusively.1

The investment companies that we work with are involved with are activating for sustainability motivated, i.e. long‐term measures of corporate responsibility such as fairness to employees, supply chain ethics, environmental impact. By insisting on accountability in these realms, companies are compelled to measure these factors and “what gets measured gets managed”.

This has been shown to positively impact the bottom line when viewing long term results. Examples of extreme short‐termism in recent times have been the failures of Boeing, Wells Fargo, Volkswagen. Most recently, the “get back to work” response to COVID has literally led to deadly consequences.

As a nation, as a species on this fragile planet we call home, what are the lessons we must learn that will lead to a solution that goes beyond our immediate, current crisis?

As frightful as this pandemic is, it is both a symptom and a warning of the even greater danger of global warming. The timeline for this virus is finite. Even if we fail to respond individually in a responsible fashion, we will eventually have a vaccine. The urgency of finding a cure and/or a vaccine is tragically obvious.

For the poorest of the poor, the impact of global warming is tragically obvious as well. They are quite literally being forced to gather their meager belongings and move to higher ground year after year due to floods and rising tides. Their livelihood is vanishing as the abundant resource of our earth are drying up or being killed by our wasteful consumption and packaging. We know of their plight; we are not yet grasping that we are sharing in their plight. Do we really have to wait for a tsunami (figuratively or literally) to hit our shores to grasp this? If so, it may very well be too late. Just as waiting for corpses to pile up before we take social distancing and wearing masks seriously has allowed the pandemic to spread unnecessarily.

Fortunately, there is an awakening that is happening. We can all be participants in that awakening. By staying informed, by getting involved with an organization that is addressing the issue of greatest concern to you, making conscious consumption and packaging choices and by making sure you are registered to vote in time for the November election.

1Source: The Embankment Project for Inclusive Capitalism, Oct. 2019