whom we serve

The Shareholder Commons (TSC) addresses social and environmental issues from the perspective of shareholders who diversify their investments to optimize risk and return. Our advocacy focuses on the divergence that often emerges between a company’s interest in maximizing its cash flows over the long term and its shareholders’ interests in optimizing overall market returns.

our theory of change

The most important factor determining diversified portfolios’ long-term value is the economy’s intrinsic value, not individual portfolio companies’ relative financial performance. Accordingly, individual company behavior that harms the economy threatens diversified investors, even when that conduct might increase the company’s own long-term value.

But the structure of markets today focuses investors almost entirely on the effect company decisions have on the company itself: shareholder ESG (environmental, social, and governance) activism generally seeks “win-win” changes in corporate behavior that will both improve a company’s social and environmental impact and increase its enterprise value. This strategy implicitly permits business plans that harm social and environmental systems and, consequently, diversified shareholders, as long as those plans maximize value at the enterprise level.

TSC provides tools to diversified shareholders that allow them to prioritize the preservation and enhancement of systemic value. These tools will improve financial returns and better align the financial sector with the global economy’s needs.

our mission

TSC’s mission is to help diversified shareholders to reprioritize their activism to put social and environmental systems first. Our work demonstrates that shareholders (or managers who represent their interests) have the capacity to force substantive change at companies to improve the economy and thus diversified shareholders’ returns. We seek to catalyze the development of shareholder-created guardrails: minimum rules of conduct that level the playing field.

The Corporate Sustainability Movement

The Shareholder Commons “(TSC)” grows out of our leadership’s prior experience creating paths for sustainable business through work in both the for-profit and non-profit sectors.  While recognizing the investment community’s increasing focus on corporate social and environmental impact, we all came to believe that there was a critical gap in investor efforts to engender more responsible corporate conduct. 

The Problem of the Business Case

Despite the important work being done under ESG, sustainable investing, and similar labels, we perceived two related barriers to the fundamental changes needed in the financial system. First, when investors engaged with portfolio companies on social and environmental concerns, they shied away from calling for actual prioritization of these concerns over profits; instead, they relied on arguments that companies would increase their long-term financial value by improving their systemic impact. Second, in order to justify the reliance on such “win-win” argumentation, many investment professionals denied that a conflict ever exists between caring for society and the environment on the one hand and optimizing long-term enterprise value on the other. 

This denial is a potent but dangerous fantasy. Businesses operate in a complex, interdependent economy that is threatening critical planetary and social boundaries; as a result, many successful strategies for increasing cash flows and enterprise values can externalize significant costs. Realistically, the changes in corporate behavior necessary to preserve critical systems will require some corporations to make decisions that will not maximize their long-term value. 

Our work relies on the recognition that this surrender of value at the corporate level is not necessarily problematic from an investor’s perspective. Indeed, the greatest threat to diversified investor returns comes from the trillions of dollars in social, environmental, and economic costs businesses externalize annually, not from the failure of individual companies to optimize their own returns. Diversified shareholders internalize these costs, and the company-first focus of current shareholder engagement can’t adequately address company behavior that undermines long-term, broad economic health. TSC promotes system stewardship to close the gap between conventional ESG investing and the challenge of corporate cost externalization.