The Shareholder Commons applies a PRE-COMPETITIVE systems approach to corporate purpose and social responsibility.
While today’s ESG (“environmental, social and governance”) initiatives focus on improving individual companies, we believe that in a free market system, investors and companies must work collectively to establish universally applicable minimum standards in order to preserve essential social and environmental systems.
The Shareholder Commons will advocate for an economic system where companies are expected to forgo profits made from the exploitation of vulnerable communities and depleting common resources, and instead focus on profits from innovative value creation.
Leveling the playing field
The Shareholders Commons seeks to catalyze a movement of universal owners to identify and implement minimum acceptable standards of corporate conduct that all businesses must meet before pursuing profit.
The Shareholder Commons will develop and advocate for public policies that accommodate the needs of universal owners.
Speaking on behalf of the universal owner in the courts, The Shareholder Commons will use litigation to further systems change and stop rewarding irresponsible companies with high margins and cheap capital.
opportunities for engagement
Investors are trapped in a system where success is measured by alpha, but the race to outperform and lower fees is threatening the systems all companies and beneficiaries rely on. Read here to find a better path.
As long as private capital chases relative return with no regard for systemic effects, direct policies to rein in business exploitation of common resources will be locked in a struggle against regulatory capture evolving technologies and tactics. Read here to learn about policies that reset the way private capital operates, in order to harmonize public and private goals.
While businesses are frequently demonized in discussions about social and environmental issues, corporate attempts to manage impacts are often hampered by shareholder pressure to prioritize financial interests. To learn how you can be part of a movement where shareholders encourage authentic corporate commitment to stakeholders, read here.
Unfortunately, the law and perceptions of the law can lead to corporate and investor behaviors that undercut attempts to address systemic issues through improved business conduct. Members of the legal community with an interest in helping to change this dynamic should read here.
TSC is excited to announce the publication of a full set of tools for investors who are ready to use their shareholder rights to protect critical social and environmental systems. As readers of this blog know, system stewardship is the most effective strategy available to diversified shareholders who want to optimize their portfolio returns.
This suite of tools will provide asset owners with principles to adopt and follow throughout the organization, references to important legal guidance, specific language for proxy-voting guidelines, and advisor mandates and other materials that provide a turnkey solution that investors can easily customize. These open-source materials are available on our website and will be updated as we receive feedback.
Investors have already developed highly effective tools to press companies to optimize their returns. These tools include engagement on social and environmental issues that is designed to increase returns and decrease enterprise risk at individual companies. But the greatest threat to the long-term returns of diversified investors does not come from the failure of individual companies to optimize their own returns, but from the trillions of dollars in social and environmental costs businesses externalize annually. Diversified shareholders do internalize these costs, and the company-first lens of current shareholder engagement cannot address company behavior that undermines long-term, broad economic health. Investors need tools to close this gap.
Four elements are essential to system stewardship: a legal foundation, a clear internal mandate, external mandates, and stewardship practices.
- To get a broad understanding of the theory behind our initiatives, you can check out our two pager, or read this short blog post, this medium-length article, or this longer academic piece.
- For an overview of our strategy and an introduction to The Guardrail Project, watch our webinar.
- To catch up on what we have been doing, check out this archive of our newsletters
- For a case study in how shareholders make a difference: Majority Action, Climate In The Boardroom: How Asset Manager Voting Shaped Corporate Climate Action In 2019
- Two of the leading thinkers today on the problem with the current financial system: J. Hawley & J. Lukomnik, The Long and Short of It: Are We Asking the Right Questions? Modern Portfolio Theory and Time Horizons,
- An authoritative piece explain why all of this matters:UNEP Finance Initiative, Universal Ownership: Why Environmental Externalities Matter to Institutional Investors
- A sensible plan for a capitalism that works for all of us from the former Chief Justice of Delaware: L. Strine Jr., Toward Fair and Sustainable Capitalism
Together, we're embarking on a fundamental transformation of our financial system...