The most maddening excuse you can hear these days about corporate greed and single-minded pursuit of profits is that “Wall Street makes us do it.”
Many executives who claim they can’t consider issues of worker justice or customer service allege that the drive to ever-larger profits is driven by this “Wall Street devil.” Call it the market, the shareholders, the Street or the analysts. All the terms imply that someone else insists companies produce ever-larger short-term profits.
I do not believe in the Wall Street devil. I think the devil is us. When we demand that our investments yield 10 percent every year, when we dump companies that try to do good and treat employees fairly, and when we buy stocks that support ruthless competitors who cut pension plans to employees or outsource jobs overseas, we become the problem.
We have far more power than we ever like to admit. Last year, an executive of a major company refused to answer questions at a shareholder meeting even though his compensation and the stock performance could be legitimately questioned. Stockholders of that company could have cast their vote by dumping the stock, but that doesn’t happen a lot because most small investors convince themselves they can’t make a difference.
A year or so ago my new financial adviser was doing his job well when he offered me an offshore investment. The transaction was incredibly complicated and about all I understood was that it was legal, but … . I said “no thanks.” I can’t make a big splash with my small investments, but I simply don’t want to be a part of any investment that could ever be considered the least bit shady. My adviser agreed and he has never offered my anything like that again. Advisers will serve their customers.
A few months later I was carefully perusing my stocks that rest in a managed portfolio. I spotted a company that I think has been a business vulture. In my opinion, its business strategy is to buy small town companies and then cut them to the point where they no longer serve the community well. I again went to my adviser and said I don’t want to own that company because I don’t want to condone how it operates. My adviser again reacted like a prince and said we’d simply tell the manager not to hold that stock for us. He then wanted to know if there were any other stocks I wanted to avoid.
The lack of my few dollars of investment is not going to bring that company to its knees, but I feel better knowing that I am exerting just a tiny bit of influence on how American business operates. If everybody exercised the same kind of control, shareholders could have a significant influence.
Now my adviser has brought me a new idea that might allow socially conscious investors to make a huge difference. It’s called the Domini 400 Social Index.
The Domini 400 monitors the performance of companies that pass some exclusionary screens, such as selling military equipment, tobacco and alcohol, and so on. Employee relations and product quality are other screens considered.
If investors decide they want business to stand for more than just the bottom line they can sell the stocks that don’t operate with a conscience, and buy the stocks of companies that do. Small investors could create businesses that truly care for the common good.