Investors can’t maximize their returns without addressing the social and environmental costs that portfolio companies externalize. We help institutional investors to preserve resources vital to long-term performance by encouraging companies to pursue business strategies that don’t impose social and environmental costs on the rest of their portfolios.  

For example, the economic loss a diversified portfolio incurs from unrestrained climate change is likely to far exceed any excess return that an investor might receive from picking companies that outperform the market. By the same token, when companies overuse or misuse antibiotics, fail to pay their workers a living wage, evade taxes, and ignore human rights, they damage public health, destabilize society, threaten infrastructure, and risk the global order, all of which threaten diversified shareholders’ returns. 

Our system stewardship resources help investors to protect their portfolios from such systemic threats. They help investors to ensure that the companies prioritize their systemic impacts over individual company profit in order to protect portfolio values. This reprioritization may require companies to reject practices that damage the systems that support our global economy, even if such rejection could decrease of the individual company’s relative return. 

Our system stewardship tools are specifically designed to address this potential divergence of interest between diversified investors and the companies they own. We describe the economic and fiduciary implications of these ideas here, and we explore system stewardship concepts further here. 

Contact us if you’re interested in learning more about this movement. 

The gap is created when regulators and investors expect corporate executives to prioritize company value over all other concerns. This focus ignores a critical aspect of our economy: that companies can impose significant costs on social and environmental systems. These systemic costs are borne in part by the shareholders themselves, who typically own diversified portfolios that rely on a healthy economy.  

One example of this misplaced focus is disclosure rules that require companies to provide investors with information that is relevant to the companies’ own enterprise value, but not with information that discloses how the companies affect social and environmental systems, even if understanding that systemic impact would allow investors to better manage impacts on their portfolios better. 

As part of our policy initiatives, we provide input to regulators and legislators, file amicus briefs in relevant litigation proceedings, and support impact litigation. 

See this page for a list of policies we support and this page for a list of comments and other documents supporting policy change.

Contact us if you want to help advance change along these lines.  

Asset owners (such as pension funds) and professional asset managers are often concerned that considering portfolio companies’ social and environmental impacts when making investment decisions would violate their duty to prioritize their beneficiaries’ and clients’ financial returns. TSC has collected material to show that considering such impacts is consistent with—and often essential to—maximizing returns. 

We have also developed tools such investors can use in internal and external mandates to manage such impacts, including the legal foundation for system stewardship. Lawyers may additionally be interested in the policies we support and our regulatory comments and other documents supporting policy change.

Contact us if you’d like to explore these topics further. 

TSC collaborates with advocacy organizations that address risks to critical social, environmental, and economic systems.  

Many of these threats can be traced directly to capital market structures that incentivize companies to maximize their own value at any cost. As a result of these incentives, efforts to address issues such as climate change, noxious inequality, compromised public health systems, and disinformation must swim upstream against a far more powerful counterforce. TSC provides tools and strategies to help activist organizations to contend with and remove market barriers to their good work by demonstrating that “company-first” capitalism that threatens systemic resources ultimately hurts investors as well. 

Advocacy organizations can enlist investors with an economic stake in preserving the same systems those advocates are working to protect. For example, an organization working to protect the workers’ rights can demonstrate that companies’ pursuit of profit through anti-worker strategies leads to broad economic harm that weighs down diversified portfolios. Investors interested in preserving their portfolios can then use TSC’s resources to discourage such strategies at companies in their portfolios. 

We expand on these concepts here, and we invite interested organizations to contact us to learn more. 

The Shareholder Commons is an independent nonprofit organization seeking to change the way investors think. We maintain our independence by not charging for services or collecting membership fees. You can make a difference by donating today.

To support TSC’s work and mission:

The Shareholder Commons is committed to transparency. To learn more about our work and review financial statements, visit our  Guidestar Profile.

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