As the following NY Times article suggests, businesses with market power ( the ability to set wages for the sector, the ability to set prices, the ability to crowd out start-ups) may be undermining their long-term success.
Many businesses operate with the belief that if they can dominate, they can grow and profit unimpeded. Indeed, for a while, sometimes even a decade or more, this may even be true, returning shareowners a hefty return. But after a while, the lack of new business start-ups becomes a drag on the economy. New businesses are the engines of growth. They provide the most new jobs, an outsized portion of innovation and new avenues for exploration, and have been a key path for immigrants and the lower classes to rise to the middle class.
Without this growing crop of new businesses, there becomes no growth in customers for the large dominant companies. As Walmart famously learned, if you force all other businesses to fold, and prevent new ones from rising, there are fewer employed people to shop at your mega-stores. If you set the wage standard to below subsistence, no one can afford to shop at your mega-store – not even your own employees!
Earlier this year, TruValue Labs (creators of Insight360 SASB ) laid out the top 10 reasons Wealth Advisers and Managers are following investor demand to ESG.
The next question: how do ESG, or environment, social, and governance investments, perform? When do these strategies work, and why?
Here’s a look at the circumstances under which ESG-related investing works the best, across different asset classes such as stocks and bonds.
Alternative investment firm Bain Capital is betting that mission-led investing can deliver returns on par with its standard private equity pools.
Also inside: Vanguard’s votes on climate change are up for their own vote; Big oil is waking up to EVs; Deloitte is beginning to shift away from traditional approaches built around gender, race, or sexual orientation.
These changes are happening – denying them just puts a company further behind in adapting, and that means a drag on productivity and returns. Selecting your investments to include (or only contain!) companies that are addressing these changes and adapting TODAY not only contributes to a better future, but better returns.