By Derrick Mains, Principal of Your3BL Advisors and Host of Your3BL Radio
We all know that there is a rising tide of resistance against some large corporations. It could even be said that the word “evil” has become synonymous with big business. But have you ever wondered what makes these companies so evil? I mean, companies are made up of people—employees, management, shareholders—so which of these is the evil monster behind the scenes?
A few years ago, I had the opportunity to meet with the president of one of the largest companies in the world. He was much nicer in person than I had expected. No fangs. No horns. And if he had a tail, he must have tucked it away before I arrived.
I asked him about his company’s investment (or lack thereof) in green and clean tech, and his answer surprised me.
“Who runs this company?” he asked.
“I suspect you and the CEO” was my answer.
“What about the board?”
“Yes, I guess so.”
“But who does the board report to?” But before I could answer, he said, “The shareholders.”
“And who are our shareholders?” he added.
Knowing that they are a large public company, I already knew the answer.
The public does. You and I own that company.
If you have an IRA, 401(k) or any investment vehicle, the likelihood that you are a shareholder in that company and dozens of other “evil” companies is pretty high. Even the investigative (and controversial) documentarian Michael Moore was surprised when the media revealed that a foundation he had established once owned Halliburton shares–Halliburton being one of many major corporations that Moore pointed his finger—and lens—at.
Why are we investing in such companies? Well, we all have financial goals, and these companies are top performers with sustainable (in the financial sense) profits. The kinds of companies you, your broker and your fund manager put your retirement in. Sure there are some fat cats out there that own a lot of shares, but those fat cats depend on you and me to hold those shares and buy the products they represent in order to keep the demand and the stock price high.
We all want our investments to perform, to incur dividends, post higher stock prices and overall, receive good news from the market. And when a stock’s performance is poor, we want to dump it and buy more winners. The challenge is that there is always a fiduciary responsibility to someone. Boards and CEOs have a responsibility to shareholders, and you have a responsibility to your future, your wife, kids and grandkids to create a portfolio that performs. We have been programmed to judge winners and losers based on their short-term performance, not on the overall sustainability of the company.
Again, which of these is the monster behind the scenes?
The reality is that that evil monster just so happens to be a puppet and we live in a society where we, the public, pull the strings. As consumers, we vote for which brands we want to see and which products we want on the shelf. As an investor, we vote for the practices and profitability that meet our goals. Like it or not, when all is exposed, it is you and me that determine the morality and mortality of giant companies. And since we pull the strings, we can set the stage and dictate the performance we want.
Those wishing they could impact the way big business does…well, business…would be well-advised to take a closer look at their own portfolio. You might be surprised how many companies in it do not align with your moral interests but were added there based solely on financial well-being.
In a March 2010 article for Slate Magazine, Eliot Spitzer wrote, “We own the corporations whose behavior we disdain, yet we fail to use our power to control them. Ownership trumps regulation—or litigation—as a means for controlling corporate behavior.”
If we want change—big change—Investments into the green economy, green jobs and alternative fuels, if we want transparency and accountability, then we need to use our collective rights as shareholders and consumers to get it. We, as the cogs of capitalism, must shift our focus from short-term earnings to long-term sustainable (in every sense) growth. What good is Washington regulation tainted by the voices of lobbyists?
If you want a voice in this process or to increase your clout, buy more shares in the companies you want change from so you can affect that change. This is the way our system works. Of the people, by the people and for the people is not just the axiom of democracy; it is the future of capitalism. In democracy, you get a vote. In capitalism, you buy them.
So what is the evil behind these companies? The whole is only good as the sum of its parts.
In 2009, Derrick created GreenNurture.com, an online platform that engages employees in corporate initiatives to reduce a company’s environmental impact while fostering behavioral and attitudinal changes within the workplace through the application of social learning.
Derrick currently consults for a number of public and private companies in the electronics, medical and petroleum industries. He is also the host of the weekly radio show Your3BL which focuses on the application of sustainability as a core business principle. Derrick is a board member for the Arizona Green Chamber of Commerce and was a 2010 Green Pioneer award recipient.
Derrick can be reached at Derrick@your3bl.com or on twitter @enviralmentalst