Reputation, brand and image are very important priorities for corporations, organizations and institutions. These characteristics and the products and services that they provide are closely related. Because we are now able, in most instances, to put a quantitative value on reputation, brand and image, they are considered as important to overall worth as the products and services that a corporation offers.
Welcome to the age of globalization, the worldwide web, social media and the 24/7 news cycle. Even the long held traditions and beliefs about releasing bad news after the Big Three TV networks have set their evening broadcast schedule or the major newspapers have gone to press or late on a Friday afternoon at the beginning of a holiday weekend have been consigned to the archives.
Examples that demonstrate the truth of this reality surface almost weekly. This week General Motors is in the spotlight but Toyota, JPMorgan Chase, Citigroup, Walmart, Chesapeake Energy, Peabody Coal, Goodwill, religious and other not for profits have all been through the same experience. The list is both lengthy and cuts across all sectors.
A case argued before the U,S, Supreme Court in late March provides the context for a different yet similar example of a challenge that all institutions face. Hobby Lobby, a privately held family corporation whose values are rooted in biblical principles and their Christian faith, including the teaching about prohibiting embryonic stem cell research, restricting abortion and contraception use, was joined by more than two hundred other plaintiffs in arguing that the Affordable Care Act violated their deeply held religious beliefs and religious freedom. (The court is expected to rule on the case before summer).
An investigative piece in Mother Jones, later commented on in Forbes magazine, has revealed that 75 percent of the employee 401K pension plans of Hobby Lobby have wide exposure through their choice of mutual funds for those pension plans to companies that produce or offer the products and activities that they are contesting in court. A look at the pension plans of other plaintiffs in this case reveals a very similar pattern of exposure to the products and services that are being contested in the court case.
Shocked and amazed are the kinder reactions to these stories; hypocrisy and lack of integrity are more frequent tag lines. Is it possible that there was no communication between those making the decision to go to court and all the way to the Supreme Court and those responsible for making decisions about the investment of the employees' pension plans? Are these institutions still operating out of a siloed organizational model that organizational experts have advised against for years?
Unfortunately the answer appears to be a resounding YES. In spite of all the research and analysis that have clearly demonstrated that all such institutions are communicating constantly through multiple channels with their members, customers, clients and stakeholders, there still seems to be a need for thy kind of integration work that guarantees a seamless messaging across all their activities.
It has been a very long slow journey for those of us active in the faith consistent investing and socially responsible investing movement but this case, I am delighted to acknowledge, adds yet another chip to our side of the debate. The long preached dictum of too many professional financial consultants and asset managers is that introducing beliefs and values into the investment process and decision making will have a negative impact on return. I think it is a reasonable assumption that this philosophy was operative in the investment process of the 401K plans in question.
As has been demonstrated by numerous studies, acting accordingly to one's beliefs and values does not negatively impact returns and in some cases has been demonstrated to actually show a positive result. Still many professional asset managers and members of investment committees refuse to acknowledge what the data has shown. This unfortunately is also in the corridors or religious organizations and faith based institutions and corporations.
If there were no alternatives out there where those responsible for managing and investing the pension funds of the institutions we have been discussing could invest, that would be different. However, recent decades have seen the creation of numerous alternatives that have been established and proven successful while adopting faith-consistent teachings and principles or strongly held values or causes.
Hopefully the negative attention and exposure that has emerged in this case will be a wakeup call for the institutions involved and presents an opportunity for them to take a look at how already existing funds can not only protect them from such negative publicity in the future but, on a more positive note, provide yet another arena where they can testify to the beliefs and values that are the foundation of their institutions. I am confident that they would welcome the opportunity to strength the integrity of their institutions and the values they promote.