Capital Markets as Moral Agent?
The intersection of segments of our modern, western society do not come neatly packaged in such a way that consumption of their benefits enables simple moral segregation. What I mean is that overlaying moral choices within the conventions of this society often creates a moral dilemma, if we are prone to give it much consideration. Unlike Reese’s peanut butter cups, which provide the perfect combination of flavorful delight, participation in capital market investments sometimes leave us with a bittersweet taste in our soul, if we are prone to give it much consideration. And scrutiny is what we at Stewardly Advisors do, for the good of your long-term investment success, and, as we aim through responsible investment selection, to increase the welfare of society. What follows is intended as thought provoking but encourages conviction appropriate with your personal consciousness.
Markets in simplest terms are no more than intersections of willing buyers and willing sellers to exchange goods and services, and prices serve as the clearing mechanisms for this trade. The investment marketplace is nothing more or less, but complicated packaging and distribution injects intermediaries, such as investment advisors, to assist with helping participants understand the choices involved. Until recently, most of those explanations involved fundamental analysis of a corporation’s ability to provide a positive return for either buying ownership (stock) or issuing debt (bonds) to a company. However, in this age of everything activist, companies have entered the arena and unabashedly taken center stage in an effort, for better or worse, to leverage their market strength as influencers of the direction of public opinion on topics from environmental and social, to most recently, issues of a moral nature. In so doing, this has expanded the dimension of engagement responsibilities of advisors involved in the process to include at least some degree of examination and explanation of these related concerns for investors. This aspect of investment advice has various labels including ESG (environment, social, governance), value-based, impact investing and a unique subset called BRI or Biblically Responsible Investing.
The recent Supreme Court decision to overturn Roe v Wade evoked a rapid response in messaging from companies about their relative stance on the moral issue of abortion. While others focus on the “correctness” of this decision by the court, our role necessitates that we rather focus on implications to the capital markets. Consistent with freedoms provided for and protected by our constitutional government, and furthermore consistent with ideals of a free flowing, capitalistic-driven market-based economy, under which, our society, predominantly still operates, our firm fully supports the right of a company to take whatever stance they may decide to pursue related to this moral choice, as an employer policy. However, our firm also takes the view that market participants’, (i.e., the investors’ individually and collectively), and those who facilitate the distribution (i.e., investment firms and advisors) of capital also have an equal right, and we would suggest responsibility, to have a determinative policy view as well, regardless of, or in addition to, the prospects for positive returns.
One of the overarching philosophical guides to our investment choices at Stewardly Advisors and EverSource, is an intent to select and create portfolio options with underlying investments that predominantly support and promote flourishing in society. There is always that intersection of matters that clouds this finite separation, but it is our goal to be careful and intentional in this pursuit. A flourishing society is an ancient concept and involves how people inter-relate and are governed for the prosperity of all; and yet, we also see the foundational principle as a core statement of our own Preamble to the US Constitution in the phrase “promote the general welfare and secure the blessing of Liberty to ourselves and our Posterity.”
Division is inevitable in this world for there is good and evil; truth and lies within every part of society, including capital markets. Because some parts of a thing are bad does not in itself make all that thing bad. Indeed, we believe that free-flowing capital is a means by which society can flourish greatly and therefore it is a good thing. It is therefore our high calling to help our clients find the good in our capital markets system.
One way we are helping clients connect to goodness in the capital markets is through our recently developed faith-based portfolio model, which would fall into the BRI category I mentioned above. As the expression of moral consciousness in investments has taken center stage in recent days, we want you to know that we are ahead of that curve and ready to discuss how implementation of our faith-based portfolio might be a fit for your values alignment in a moral context.
As a concluding thought, we invite you to celebrate with our team the recent adoption of a newborn by partner Caleb Bagwell and his wife through Lifeline. This is child #4 and the result of a heart conviction to participate in a culture of life for children who might otherwise face termination from a mis-timed or unintended pregnancy. Lifeline and Save-a-Life are two organizations in Birmingham that our firm would recommend as a target for your generosity plan, be it your time, talent or treasure.
We are so thankful for your continued relationship to our firm. While we stand firmly on the moral side of life and liberty for all, including those who have yet to be born, we understand and respect any who may have a differing view and welcome cordial discourse about why our worldview lands where it is.