This week’s Conscious Capitalism In The News: Are there guns in your 401k?, Fed up with guns? – divest or engage, BofA shafts low-income customers, C-level sexual harassment damages returns, Big banks normalize crime, and more…
Jon Hale, Morningstar’s Director of Sustainable Funds, is on a roll. And he has some brilliant points. Look, if the government won’t regulate the gun market, then perhaps we need to look at the markets themselves. Hale calls on mutual fund companies to either divest from gun manufacturers or, as major shareholders, actively engage with gun manufacturers and urge them to stop standing in the way of common sense regulation.
“Mutual funds are among the largest owners of the four public companies that manufacture guns and ammunition in the U.S., including American Outdoor Brands AOBC, the firm that made the AR-15 used in the massacre of 17 high-school students last week in Parkland, Florida.”
Hale believes that mutual fund companies claiming they can’t divest because they are required to replicate a third-party index is a cop-out. He calls out Blackrock specifically, especially in light of Larry Fink’s letter to CEOs recently in which he stated:
Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the community in which they operate. – Larry Fink, Blackrock
According to Hale, Fink would agree that his advice applies to fund companies as well as the firms in which they invest.
Mutual-fund companies have a responsibility to their investors, to themselves and to society to help address the problem of gun violence, and in the process, demonstrate that they too have a “sense of purpose. – Jon Hale, Morningstar
Vanguard is the largest institutional shareholder of American Outdoor Brands, the maker of the AR-15 assault rifle used in the Florida shooting.
A 2016 analysis of 23,000 mutual funds by MSCI found that nearly three quarters “had some exposure to the weapons industry,” and approximately half of those funds “had direct exposure to gun manufacturers.”
If you have a 401k, there is a good chance you are invested in the gun industry. If this bothers you, you can do something about it.
What can you do?
- Talk to your financial advisor.
- Call your mutual fund company and ask.
- Move your money to socially responsible mutual funds.
(If you have a 401k, you have more power than you think you do. Learn how to take control of your 401k.)
Wynn shares fell from $200.60 to $166.58 after a Wall Street Journal report on Jan 26th outlined a decades-long pattern of sexual misconduct by Steve Wynn.
Guess stock fell from $18.98 to $15.62 after Kate Upton’s Jan 31st #MeToo tweet about Paul Marciano, the apparel maker’s executive chairman. In a further interview with Time, Upton said she had been groped and forcibly kissed by Marciano.
Wynn has since stepped down as CEO, lessening the damage to shareholders. But this begs the question, how can publicly traded companies manage damage control as more and more sexual harassment allegations emerge?
Adam Strauss, portfolio manager of Appleseed Fund (APPLX), mentioned that indicators like governance can be a proxy for good behavior. “If they’re taking good governance into consideration, then they can probably address harassment responsibly.”
Perhaps if good governance had been taken into consideration, they wouldn’t have found themselves in this position to begin with.
Times have changed. Don’t start nothing, won’t be nothing.
Last month BofA announced it was no longer offering free checking accounts. Now, low-income customers must keep a minimum daily balance of $1500, or be able to direct deposit $3000 per year, in order to qualify for free checking.
Why are the most financially vulnerable people in the US charged more to use their own money?
Americans earning less than $30,000 a year pay more pay more than three times the monthly bank fees paid by higher-income brackets, according to Bankrate.
People need to know that there are alternatives to these banking giants.
Enter Aspiration. In the wake of the conscious capitalism movement, Aspiration’s motto is “Do Well, Do Good.”
Here is why Aspiration is different:
- Zero overdraft fees
- Free access to ATMs anywhere in the world
- Up to 100x more interest earnings than Big Banks
- 10% of what they earn goes to charity
- Enviro-friendly banking and investing
Aspiration is now offering all Bank of America customers a $12 credit if they switch to Aspiration. That credit amount represents the monthly checking fees they would pay BofA if they did not maintain the low-balance minimum.
If you got shafted by BofA, give Aspiration a look.
Last month federal authorities fined Deutsche Bank, HSBA, and UBS a total of $46.6 million without any of the banks having to admit guilt. They were accused of spoofing the markets. This means that they place a huge order to buy or sell a stock in order to distort the price of the stock to their benefit, and then cancel the order. The money for their fines comes from shareholders, not the individual bankers themselves.
This happens over and over again with big banks. They break the law, are fined by the government, and pay the fines with shareholder’s money, only to do it again and again. After the financial meltdown of 2008, the government did not charge any top bankers, nor pursue corporate prosecutions for the mortgage fraud that fueled the bubble and led to the crisis.
Big banks get away with their crimes for a monetary slap on the wrist. No one is prosecuted. The settlement is sealed by the government and no one can see the details of the crime. The fines paid by shareholders are simply considered “the cost of doing business.”
Some people think that big banks are “too big to fail.” What do you think?
The Invisible Heart of The Markets: An Interview with “The Father of Social Impact Investment” – Asahi Shinbun
Born in 1945 in Egypt, Ronald Cohen is chairman of the Global Steering Group on Impact Investing and serves as chairman of the British social investment bank Big Society Capital. A pioneering venture capitalist, he has been called “the father of social impact investment.”
Q: Why did you become involved in social impact investment?
If you look around at charitable organizations everywhere in the world, they share two characteristics in common: one, they have no money and, two, they have no scale. … I decided that it should be possible to do what we did for the tech revolution to respond with a new way of connecting entrepreneurs, social entrepreneurs in this case, to the capital market.
Q: But wasn’t it the case that social responsibility efforts by companies until now involved sacrificing part of their profits?
We are beginning to see the millennial generation drive the change, a new breed of young person for whom just making money is not the only goal in life…A new generation of entrepreneurs and CEOs are creating new business models where impact is at the core. The more you help to reduce carbon emissions, the more money you make. The more you help poor people to get out of debt, the more money you make. So, a new form of business model is coming up.
Q: Is it true that those involved in social impact investment have established as a goal making 2020 a major turning point for such investment?
I think what is going to help us achieve the goal is now the worldwide interest in achieving the U.N. SDGs (sustainable development goals), which have to be achieved by 2030.
Q: What do you think about the relationship between money and happiness?
I think fulfillment comes from achieving a balance between what you do for yourself and what you do for others. I think our society has gone through a period where … the purpose of business is to make money. And I think we are shifting. You know Adam Smith’s “invisible hand of markets”? I like the phrase I coined which is the “invisible heart of markets” because we bring the invisible heart of markets to guide their invisible hand.