Wanna Scare Jamie Dimon? Be a Tree for Halloween
By Greg Fields
I love my colleagues. But they also annoy me. Full disclosure: we are an activist, environmentally progressive investment firm. Our CEO hearts Tesla and our firm owns the stock. Nearly all our managing partners have purchased a shiny new Model 3 or the swanky Model S. So, when I pulled up in my brontosaurus-burning Jaguar, I endured a cacophony of carbon-shaming. It didn’t help that I’d been chosen to spearhead the firm’s ESG/Socially Responsible Investment group. It wasn’t as bad as that time in Portland when a gang of enraged soccer moms nearly rolled my Mini because I idled the engine to warm my damp, cold feet, but still, I suddenly started to feel woefully un-woke.
I’m certainly not a fan of Big Oil and the rolling body count it generates daily worldwide, but I am a die-hard petrolhead. I like the guttural grunt of steel cylinders igniting compressed oxygen and I swore I’d NEVER drive an EV/glorified-blender-with-wheels. But climate change is not just pernicious propaganda manufactured by Chinese Politburo apparatchiks. Just take a gander out your window at the Los Angeles sky. See that brownish marmalade of expelled particulate? You wanna be breathing THAT?!
So, I caved. I bailed on my Jag for a plug-in hybrid. I now commute every day on 100% battery power. Because my car no longer makes noise, I’ve very nearly backed over a couple of inattentive pedestrians. On balance, carbon-shaming from my colleagues resulted in a beneficial change in my behavior that consequently benefits society and the environment.
Now imagine you’re Jamie Dimon. Not only do you run JP Morgan Chase, one of the largest banks in the world, but you also lead the Business Round Table, a corporate mocha-latte mob of the most powerful CEOs in America. The BRT was founded by Alcoa and GE execs in the 1970s as a lobbying leviathan bent on crushing consumer protections, labor unions or basically any legislation that might compromise their companies’ bottom lines. To be fair, protecting profit and shareholder value is a CEO’s raison d’etre. Or is it?
In a mind-blowing turn of events this past August, the BRT produced a document called The Statement of Purpose of a Corporation in which signing members endorsed the idea that rapacious pursuit of profit is actually NOT the sole purpose of a publicly traded company. Seemingly between yoga chanting sessions and avocado toast breakfasts, these CEOs affirmed their responsibility to be good corporate citizens and uphold social values, including, “Diversity, inclusion, dignity and respect”. The statement also included the unequivocal declaration: “We commit to protect the environment…and embrace sustainable practices”. Oh, the irony. One of the signers was Alliant Energy, a company that has doled out over a $1 billion in environmental violation fines (according to ViolationTracker.com) since 2000. Johnson & Johnson, another signatory, has coughed up $3 billion in regulatory fines over the last 20 years, including “corrupt practices”, “price fixing” and “wage violations”. What is going on?!
What is happening is fear. Jamie Dimon and these other Masters of the Corporate Universe are afraid of you, the investor. No matter how deeply climate science is suppressed in Washington, investors have clearly voted with their low-carbon footprint feet. A study by Yale and George Mason Universities found 73% of respondents said preserving the environment was personally important to them and a majority believe human activity is negatively impacting the earth. The shift has been equally profound within portfolios. Forbes estimates a quarter of all professionally managed money today – over $20 trillion - is now allocated towards ESG-leaning portfolios. Corporate America has seen this ESG wave growing and is now trying to ride it before it crashes down on top of them in the form of negative social media posts, product boycotts or (even more) lawsuits. That’s what the BRT’s statement is all about.
If you really want to strike fear into the hearts of c-suite potentates this Halloween, dress up as a spruce or eucalyptus. You’ll make the climate change conversation more urgent and make the big dogs of industry squirm in their Herman Miller lounge chairs. And that’s a good thing for investors. We all need to make choices that improve life, not just for ourselves, but also for our fellow humans. Even when it seems a little annoying.
Greg Fields is a Financial Advisor of Santa Monica, Calif-based Gerber Kawasaki Inc., an SEC-registered investment firm with approximately $859 million in assets under management as of 4/30/19. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures the success or protects against loss. Readers shouldn’t buy any investment without doing their own research to determine if the investments are suitable for their situation. “All investments involve risk and one should consult a financial advisor before making any investments. Past performance is not indicative of future results.”