Asset managers always have stepped up following natural disasters, funneling charitable dollars to hard-hit communities. And after George Floyd's killing at the hands of police in May and ensuing calls for racial justice and equality, numerous asset owners and managers pledged their support for diversity initiatives to increase representation of people of color and women within their ranks.
Those efforts are to be commended. But there's an issue that deserves equal attention, one that focuses on the "S" in ESG. In the aftermath of the global COVID-19 pandemic, some asset owners and their managers are taking a more active role in demanding to know how their investments impact workers in the companies in which they invest. That touches on everything from equal pay for equal work, to access to health care and needed worker protections.
The pandemic has shown that poor and minority communities have been hit hardest by the coronavirus, in terms of both deaths and job losses. Meanwhile, white-collar workers have had a greater ability to shelter at home and remain at their jobs, thanks to telecommuting.
A year ago, the influential Business Roundtable redefined the purpose of a corporation, moving from a focus on shareholder primacy to one that would consider all stakeholders — customers, employees, suppliers, communities and shareholders.
BlackRock Inc. CEO Laurence D. Fink, in a televised interview this month, said so-called stakeholder capitalism is "going to become more and more important," for investors and the allocation of capital going forward. "The companies that focus on all their stakeholders, their clients, their employees, the society where they work and operate, are going to be the companies that are doing to be the winners for the future," he said on CNBC's "Squawk Box."
Such considerations will help fuel economic justice at a time of rising inequality. And it's an acknowledgment that lifting all boats will create a virtuous cycle, one that will create a stronger economy.
For the institutional investing industry, there's also the potential for a larger pool of potential investors with jobs and a level of income that will allow them to participate more fully in the economy and build savings for a secure retirement.