Investors will confront a dramatically changed policy environment no matter the outcome of the upcoming US presidential election.
The effects of this summer’s Supreme Court decisions gutting the “administrative state” already are playing out in legal challenges to rules on climate action, labor rights and corporate accountability. Investors are gearing up to fight back.
“These attacks are reducing your freedom as investors, as owners of these businesses, to exercise your full oversight, and it’s reducing your ability to outsource any of that to the government,” Adasina Social Capital’s Rachel Robasciotti said on this week’s ImpactAlpha Agents of Impact Call.
“They’re leaving that responsibility squarely in our laps,” said Robasciotti, who co-founded Freedom Economy as a 501(c)(6) business association to provide legal protections to justice, sustainability and impact investors. “We need to continue coming together and collectively, publicly, taking stances so that we continue to have the enormous gains that brought about this legal onslaught of attacks.”
Better Markets’ Dennis Kelleher, B Lab’s Jorge Fontanez and The Shareholder Commons’ Rick Alexander and Fran Seegull of the US Impact Investing Alliance also joined The Call, “Mapping an impact investing path through the new legal landscape.”
Capital is power
June’s Loper Bright decision, for example, overturned the so-called “Chevron deference,” hobbling the Environmental Protection Agency, the Food and Drug Administration, and the Securities and Exchange Commission, and eliminated key safeguards against corporate corruption and abuse.
The mosaic of decisions by the Supreme Court “mark a dramatic and historic power grab by the Supreme Court,” said Better Markets’ Kelleher, who is out this week with a detailed analysis of Loper Bright, along with Jarkesy and Corner Post, the trio of recent Supreme Court decisions that undermine rules and regulations that protect everyday Americans.
The decisions “are going to result in a reordering of the relationship among the executive, legislative and judicial branches of government,” he said, “as well as the relationship between the government and the American people.”
Investors, he said, are uniquely positioned to push back.
“Capital is power,” said Kelleher. “Leveraging that power, and strategically deploying that power, can counterbalance the power that’s being exerted against you in other places.
Freedom to invest
Case in point: Hundreds of investors and business leaders, state financial officers, labor unions, and faith leaders have launched “Freedom to Invest” to “to remind policymakers that the economy will be stronger and more resilient if businesses can make their own investment decisions.”
Among the signatories are New York City Comptroller Brad Lander, CalSTRS’s Kirsty Jenkinson, Franklin Templeton’s Anne Simpson and Delaware State Treasurer Colleen Davis.
“The concepts of fiduciary duty, duty of care, are absolutely relevant at this moment,” said B Lab’s Fontanez, who says action has moved to state level. B Lab is helping B Corps engage state officials on the uplift from best-practices such as living wages and quality jobs, and the economic downdraft from bills banning ESG investing.
Business leaders must also flex their freedom of speech, he says. “The ability for leaders to be able to say that there is a right that workers have to earn a living wage and that they should be able to live freely and have access to affordable health care and rights to bodily autonomy – these are civil and human rights that business plays a role in protecting.”
In addition to advocacy, investors have control over “capital flow,” says Fontanez. “How do we ensure that the era of greenwashing is behind us and that investors are also putting their money in alignment with their values?”
Crosshairs and crossroads
Laws that prevent companies from externalizing costs, like water and air pollution, are what make the market economy works, says Alexander of The Shareholder Commons.
“In order to have capitalism do its magic, you have to have regulation.”
Shareholders who wish to have an impact should press companies on their political and public influence through shareholder resolutions, says Alexander. For diversified investors, that may mean limiting the profitability of one company to the benefit of the broader portfolio.
Every investor “can be an impact investor by making sure, for example, that the companies in their portfolios are paying a living wage, and that they adhere to a science-based target that prevents deforestation and excess carbon emissions.”
Impact investing “is at a crossroads, and in the crosshairs,” said Seegull of the US Impact Investing Alliance. “There’s no way we would be in the crosshairs if we weren’t making real progress.”
Still, says Seegull, the US is lagging the world in the practice of impact and sustainable investing, as well as in corporate transparency and accountability.
Broader impact transparency “will lead to an era of impact accountability,” she said. “And impact accountability, we hope, leads to more equitable economic, racial and gender outcomes.”
ImpactAlpha’s Policy Corner is sponsored by the US Impact Investing Alliance.
Among the hundreds of Agents of Impact who joined The Call:
Brian Nagendra of Spring Point Partners, Mari Hicks and Justine Correa of Roanhorse Consulting, Daniel Tellalian of Angel City Advisors, David Rankin of Great Lakes Protection Fund, Norbert Cichon of Good Chaos, Charlene Franke of LISC Strategic Investments, Paula Uniacke of DBL Partners, Cynthia Simon of The Shareholder Rights Group, Ed Ghisu of Robert Wood Johnson Foundation, Anne Clawson of Cascade Advisory, Michael Francisco-McGuire of Confluence Philanthropy, Jen Talansky and Lacy Maria Serros of Nonprofit Finance Fund, Melissa Begay of Rematriating Economies Apprenticeship, Ahmad Alif of Global Impact Investing Network, Holly Ensign-Barstow of B Lab US & Canada, Amber Reese of Tipping Point Fund, Marianne Vermeer (a consultant to CDFIs), Dave Bowermaster of Fireside Strategy, Stephen Filler of Regenerative Strategies.
Naoko Felder of NFK Consulting, Zach Komes of Founders First Capital Partners. Kyle Mylius of Humanize Wealth, Haisley Wert of Harvard Business School, Sara Olsen of SVT Group, Lisa Richter of Avivar Capital, Annabel Kuhn of Hope Community Capital, Danielle Fox of Climate Finance Action, Nick Freeman of Primary Productions, Fernando Morales of SEAF, Kent Ruffin of The African American Heritage Association, Claire Mattingly and Maddy Banker of U.S. Impact Investing Alliance, Jessica Quirt of Parkera, Dmitriy Ioselevich of 17 Communications, Karyn Polak of Shift the Prism Advisory, Maryan Abdelmesih of Better Markets, Elizabeth Damaskos of Winston & Strawn, Chris Pinney of High Meadows Institute, Tom Woelfel of HCAP Partners.
Rachel Perry of CIBC Private Wealth, Rebecca Obounou (consultant), Enisha Shropshire of CapEQ, Phil Kirshman of Manchester Capital Management, Jane Bieneman of Tideline, Bill Vogelgesang of EPOCH Pi, Ugochi Obidiegwu of NYU, Jim Olson of The Experience Alchemists, Jim Sorenson of Sorenson Impact Foundation, Brendan Lehan of New Capitalism Project, Natalia Arjomand of SecondMuse Capital, Marc Blumenthal of Social Ventures Foundation, Shivani Garg Patel of Skoll Foundation, Lisa Geason-Bauer of B Local Wi and Evolution Marketing, Cabot Brown of Carabiner, Matt Elston of Donor Money, Andrea Armeni of NYU Wagner.
