Women's March demonstrators walk past the White House in Washington, . On the anniversary of President Donald Trump's inauguration, people participating in rallies and marches in the U.S. and around the world Saturday denounced his views on immigration, abortion, LGBT rights, women's rights and moreWomens Marches, Washington, USA - 20 Jan 2018

The #MeToo movement perhaps might not give Wall Street a conscience, but social issues are starting to give some in the investment community pause — a big deal for financial types with a reputation for noticing little more than a bottom line.

Not exactly known for public displays of altruism, investors and analysts certainly pay attention to a company’s public profile and with recent revelations of possible “misconduct” by top executives from Lululemon, Guess, Nike and many other companies outside of fashion, those profiles are getting a little tarnished.

While allusions to “misconduct” — now a catchall term for high-profile people behaving badly — have been made by firms as they have taken action in the form of firing or sidelining certain company leaders, it’s unclear what exactly happened at each. Various press reports have it that Lululemon’s Laurent Potdevin was inappropriate with some employees and promoted a workplace culture based on favoritism; Nike’s Trevor Edwards and Jayme Martin are said to have allowed bullying behavior, and model Kate Upton has accused Guess’ Paul Marciano of sexual harassment and groping. Marciano has denied all of Upton’s allegations, but Potdevin and Edwards, with no specific allegations to deny, have stayed mum.

Meanwhile, none of these alleged instances has had a meaningful impact on the companies’ share prices. Guess’ stock recovered from a brief fall after Upton went public with her claims and is hovering around a four-year high of $21. The same goes for Lululemon and Nike, with shares at an all-time high of $86.51 and close to an all-time high of $65.41, respectively.

Simeon Siegel, an analyst with Instinet, admitted that markets tend to react much differently to a given company’s internal misconduct issues, depending on how they are discovered.

“There’s a big discrepancy, a big, big discrepancy, between how companies have dealt with news like this,” Siegel said. “When the news comes from the company, the stock tends to have a much more muted reaction. When the information comes from outside, in a tweet for example, that ends up being much more impactful.”

While a company’s handling and the public response to misconduct issues tend to vary significantly, Siegel admitted that the investment community, like popular culture at large, is facing a new moment.  

“The unfortunate reality is we’re operating in a time where news like this is too common, but [the investment aspect] is really dependent on how the companies choose to respond,” he said.

Asked whether companies seemed to be taking a more proactive approach to potential harassment and cultural workplace issues, Siegel noted that “by the time we hear of something,” a given company has often already been looking into the issue or allegation.

“Therefore, I think companies are somewhat terrified to find out that they are part of this, if they didn’t already know,” he said.

Siegel declined to address whether analysts were starting to take into account issues like harassment or potential workplace misconduct when looking at companies.

It could remain enough for analysts that companies keep incrementally improving their financial performance, as Lululemon, Nike and Guess all did over the past year. And likely a company will not lose major investment support if it finds an executive behaving badly, takes some action and keeps performing well, even in a post-election, social media-driven culture seemingly fixated on societal ills like sexual harassment, gun violence and tribalism. But there’s no shortage of research showing that companies that actively promote a positive workplace for employees perform better and more reliably over the years.

In January, McKinsey & Co. detailed in a study that for every 10 percent more diverse an average U.S. company becomes, its earnings grow by a corresponding nearly 1 percent. More diverse companies are also more likely to promote better workplaces and outperform the national industry median. Similarly, a years-long study by the University of Sheffield economics department published in 2015 directly linked employee trust in their company to that company’s performance, seeing it erode where there was less trust, and vice versa.  

Samantha Palm, fixed income fund manager at Parnassus Investments, a firm focused on more ethical investing, said a moment like #MeToo — which has seen so many people come out with stories of harassment and worse at work that they often had never formally complained of due to a lack of trust in their superiors — is “a little tricky” for the broader investment community to fold into any analysis and react to.

“By definition, the movement is coming out of things that haven’t been talked about in the past, so it’s not easy to research,” she said.

Regardless of the difficulty, Palm was unequivocal that things like workplace culture and a positive view of management are vital “to the long-term sustainability of a company.”

“There’s absolutely a risk part of it, but companies that have great workplaces perform better.”

A great workplace is impossible without employees having the sense that a company’s overall culture is positive and that upper management is not only competent, but gives more than lip service to “values” that a given company espouses. But a culture that fails to catch up with the times, or simply goes awry, is not easy to fix.

Palm said in most cases of workplace issues that she’s come across in her work or simply followed from a distance, “improvement can take years.” And bringing in new management is far from the fix-all that institutions dealing with current issues seem to think it is.

“It’s not a panacea, it’s not a magic wand,” Palm said. “It’s a continual process on the part of management teams and not one action alone fixes it.”

But the investment community does have some power to sway a company one way or another, and Palm is starting to see some trends pointing to a more serious and regular look at a company and its internal actions. Over the last few years, she said there’s been an obvious uptick in interest from investors and other firms around the type of “esg,” or environmental, social and governance, investing that Parnassus does.

“We used to get questions like, ‘Doesn’t this narrow your opportunities?’ and ‘Why bother with this?’” she said. “Now we get a lot of questions around how we actually do esg. The fact that the tone of the questions has changed, I think shows the broader investment community is recognizing that these factors matter. If consumers start to turn away from a brand because of an issue, that matters and it will ultimately impact the bottom line.”

There are other signs, too, that the investment community is ready to at least take a harder look at how a company acts, instead of simply how it performs.

A spokesman for the California Public Employees’ Retirement System, better known as CalPERS, the largest public pension fund in the U.S. with more than $330 billion in assets, said, “The subject of women’s rights and corporate diversity are important to CalPERS.” He added that the fund has openly pushed corporations and engaged with management from 500 companies since last year on increasing the diversity of their boards.    

Laurence Fink, chairman and chief executive officer of BlackRock, the largest investment manager in the world with more than $6 trillion in managed assets, toward the end of January sent an open letter to all ceo’s pushing for corporations to consider their potential and actual social impact, if only for their own survival.

“Without a sense of purpose, no company, either public or private, can achieve its full potential,” Fink wrote. “It will ultimately lose the license to operate from key stakeholders.”

He added that a company’s board, and a diverse one at that, “is essential to helping a company articulate and pursue its purpose as well as respond to the questions that are increasingly important to its investors, its consumers and the communities in which it operates.”

Fink said stakeholders are “right” to demand that a company lead on social, environmental and governance issues, because doing so “is so essential to sustainable growth.” He said BlackRock will be looking for its investments to be making a positive contribution to society.

Although Fink is a Democrat and is among the business leaders who joined and then resigned from President Trump’s short-lived business forum, he keeps a relatively low profile and does not often grandstand.

Mark Lipton, a corporate governance expert who’s a graduate professor of management at The New School and author of last year’s “Mean Men: The Perversion of America’s Self-Made Man,” which looks at the more toxic traits of well-known executives like Dov Charney, Steve Jobs and Trump, said he was “blown away” by Fink taking such a strong stance.

“I really think we’re seeing something new with this moment,” Lipton said. “When you have Larry Fink standing up, saying we’re going to put all of our firms through a filter…that’s huge. I think he’s really ahead of the pack.”

Lipton added that he “strongly believes” that consumers and investors are noticing issues like harassment and sustainability now more than ever and that they’re starting to “make determinations about purchases and investments or divestments” based on a company’s involvement in and response to ager social issues.

While harassment and more recently gun violence — the regularity of which this month led Dicks Sporting Goods and Walmart to ban gun sales to anyone under 21 years old and Citigroup to become the first Wall Street bank to restrict its business partners from selling guns to anyone who has not passed a background check — are nothing new, Lipton said they’ve not been publicly discussed “with the vengeance” we’re seeing now.

“It’s nothing if not an emotional fever pitch right now with #MeToo and gun control,” Lipton said. But Wall Street, save for a few exceptions, hasn’t really hopped on the bandwagon just yet, because most analysts don’t see a clear link to overall  performance. That’s something bound for a change, according to Lipton.

“This is about the bottom line, creating a high performing culture where people feel motivated, but I don’t think boards are focused on that,” Lipton admitted. “That’s the larger lurking issue the Street seems pretty blind to and if left unattended, these issues will come back again and again. This whole moment, the #MeToo thing, it’s about a culture that’s allowed something to happen for too long.”

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