Environmental, Social and Governance [ESG] are the corporate components of ethical impact measurement (Chandler, 2017, p. 129). When investors feel ESG is being compromised by management, they utilize activist tactics to impact risk, value, transparency, and accountability in efforts to “protect” their investments (p. 126).
Investor activism increases as public faith in corporate America decreases. Investors actively critique and reform executive pay structures, governance policies, and board structures. Impact strategies may include tailored fund investments reflective of personal value interests per mindful mutual or exchange-traded funds (Chandler, 2017, pp. 127-8).
Value-based impact investment has roots in the Friends Provident Institution of the United Kingdom (Chandler, 2017, p. 129). Founded by Quakers Samuel Tuke and Joseph Rowntree, the Institution was “designed for the benefit of those who wish to sacrifice a portion of their present income, to provide for the wants of a family in the event of their decease; or for their own wants in more advanced age.” (Aviva Group, para. 1) This early form of impact investing persists today with companies like Primerica & Vanguard, whose personal investment strategies have influenced the emergence of conscientious institutional investments.*
*NOTE: I tend to avoid Socially Responsible Investing given its ambiguousness within our socially ill climate. There exists no consensual SRI ideology, hence the prevalence of fraudulent practices like greenwashing – a catalyst for the emergence of investor activism (Chandler, 2017, p. 131).
The rise of faith-based impact investing is embodied by the Christian Investment Forum. However, like SRI, it’s ethical parameters are broad which has led to the emergence of “sin funds.” (Chandler, 2017, p. 134). It’s amazing how the religio-cultural wars have spawned existential battle zones within the fields of investment.
Aviva Group. Friends’ Provident Life Office. Retrieved from: https://heritage.aviva.com/our-history/companies/f/friends-provident-life-office
Chandler, D. (2017). Strategic corporate social responsibility. Thousand Oaks: Sage Publications.