There is a lot of value in the market’s largest corporations. In fact, around 500 of the world’s companies make up 50% of the stock market capitalization: this is a fairly small number already, but when you consider that there are 50,000 companies that are listed publicly and actively traded, the number becomes even more impressive. It makes sense that, when holding so much wealth, large corporations have the potential for very large impacts, for better or for worse.
At Falcons Rock Impact Investments, we think that big companies can strive to do good work and that every investment can have an impact. Here are the ways that large corporations can affect the world and benefit themselves and their stakeholders at the same time.
Impact on the World
Any effort to improve the way that a business operates will have an impact on their bottom line, and this impact is often positive for them as well as the world. Developing more efficient systems in the company itself or somewhere along its supply chain can not only cut costs but also lead to higher profits because that money isn’t spent taking care of inefficiencies. The implementation of environmental initiatives in companies can lead to reduced waste, energy consumption, carbon emissions, and water use, all of which are good for the world.
Innovation can do a lot to set a business apart as well as result in a positive impact on the world. Efforts to accomplish more in the realm of sustainability says a lot about an organization’s culture and identity and inspires a different kind of respect in customers and investors alike. Companies that develop sustainable products can make themselves stand out from the competition and, by becoming a responsible company, establish themselves as a leader while affecting positive change. Even if these innovations seem small, like recycling waste products in other parts of a manufacturing process, or improving packaging to be less wasteful where possible, in a large company that has a lot of sway in the market as well as in the world, even these things can leave a huge impact on investors and set a standard for other companies to follow if they want to share in the success.
Impact on Business Practices
The fact of the matter is that sustainable practices have a significant impact on businesses and that they only stand to gain. Higher adherence to environmental, social, and governance criteria correlates with growth, better management, and quality, both in terms of their operations and in shareholder perception. By making operations more efficient and taking care of employees to help them become engaged and productive, natural and human capital is increased and costs are decreased. Being transparent with information and learning from it has an impact on the cost of financial capital. Innovation in the business and supply chain that leads to sustainable actions leads to customer engagement, satisfaction, and loyalty, which ultimately affects revenues.
Being conscious of their impact helps companies avoid risk as well. The market is driven by what consumers demand, and businesses are “allowed” to operate based on demands. Listening to shareholders about what they want to see can dramatically impact a business model and how a company performs: this disruption in how they operate can be the thing that reinforces a good reputation or improves brand value, or it could be the thing that cuts into their profits. Investors have more power than they think they do, and this power can be put to good use.
Impact on You
Falcons Rock Impact Investments believes that every step in the right direction matters, regardless of how big it is. We also believe in holding companies large and small responsible for their business decisions, which is why we carefully vet every impact investment that we offer to clients like you, that demand responsibility in business. Learn more about our process and the kind of impact you could leave on the world, and your wallet by contacting us online.