Collaboration is key for positive social impact
By advocating for collaboration, investors can provide the positive incentive where individual firms cannot, according to Calvert Research and Management’s recent paper, Investment Stewardship for Positive Societal Impact.
The paper highlighted that companies are increasingly addressing environmental, social and governance factors, but there are limits to how much individual companies can accomplish on their own.
The paper proposed to combat this, large investors like index funds, active managers and pension funds should act as “stewards of the commons”, and ensure that companies make coordinated efforts to address the world’s crucial environmental, social and governance issues.
As studies have shown that collaborative moves by companies have enhanced financial performance through cost savings, increased brand value, innovation and employee productivity, the paper suggests that the “win-win” situation has minimal risk for large investors.
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