How can we enable companies to embed responsible thinking?

We’re increasingly distrustful of companies. For many people, businesses feel far away and often too powerful to influence.

At ShareAction, we’re a UK charity which promotes responsible investment. We want to help everyday savers to better-influence the companies that their pensions and savings are invested in to achieve what we hope will be a better return on their money and a better outcome for the world at large.

Responsible investment is about recognising that the impacts of businesses on the environment, on workers and on communities can seriously affect the value of our investments in them. Companies’ own good governance is also really important – for example how much they pay their workers and directors, or their approach to climate change.

For a firm to fail to take into account it’s environmental or social impact…is both ethically and financially irresponsible

We think that responsible investment offers an opportunity to improve the impact that businesses have on society and the environment while protecting the financial performance of our investments. How is it that a company’s environmental and human rights practices can have a financial impact? Poor environmental performance may result in compensation claims or costly clean-up measures. Exploitative labour practices and poverty wages may affect a company’s brand, reputation, worker productivity and ultimately the price of its shares. For a firm to fail to take into account it’s environmental or social impact as part of its overall investment strategy is both ethically and financially irresponsible.

We’re successfully influencing the behaviour of powerful institutional investors…which in turn will influence the behaviour of corporates

Through our work to build an educated movement of savers we’re successfully influencing the behaviour of powerful institutional investors: pension funds, retirement plans and fund managers, which in turn will influence the behaviour of corporates One of the best examples of our work is our support for the campaign for the Living Wage, with 25 FTSE 100 companies now committed. In the last 13 years, firms have told us that the application of Living Wage standards has led to increased business performance, reduced staff turnover and enhanced corporate reputations whilst lifting over 60,000 families out of working poverty. Other examples where progress is being made can be seen in getting the FTSE 100 to use 100% renewable energy in their operations and signing up to greater transparency on their approach to tax (e.g. the Fair Tax Mark).

As companies implement these changes they’re telling us that they are also seeing their trust with investors and customers improve. As a result we’re also increasingly seeing companies taking proactive steps to behave responsibly across their operations and going beyond a ‘lip service’ approach we might once have expected.

Being a responsible business is increasingly a competitive advantage, and with the demand from investors only set to grow, we’re looking forward to more businesses taking a lead.

 

Jamie leads work at ShareAction building a network of citizen investors to catalyse change in the UK’s pensions and investment system. His career has focused on education and democracy and after teaching he joined Citizens UK as a community organiser with special responsibility for schools work, and then undertook the Clore Social Leadership Programme. More recently he spent time working in business at Pearson, the FTSE 100 and world’s largest education organisation.