On March 10, the ACC Docket published an article co-authored by Hirschler investment management practice group leader Ed Klees and Harvard Management Company’s managing director of compliance and sustainable investing, Michael Cappucci. The article highlights potential concerns for institutional investors stemming from the civic and political activities of their financial advisors and the companies in which they invest.
On the heels of the social justice protests of 2020 and events at the Capitol on January 6, institutions are examining how they might be affected in the public and private markets. In the public market, investors are asking to what extent they can spur good civic practices of companies through moral suasion or the proxy process. In private markets, where investors’ rights are different, many investors are asking how they can extricate themselves from private equity, VC and hedge fund firms associated with bad conduct.
Klee and Cappucci say, “The road to improvement is the same for investors in all markets: For financial and investment firms to bring a greater sense of purpose to their businesses, and specifically, better transparency in the deployment of corporate funds in political discourse, either by changes in self-governance or regulatory force.”
In response, say Klees and Cappucci, expect to see industry groups that represent investors to pressure Congress and the SEC to enact stricter rules governing personal conduct by investment firms and corporate management. Also, look for additional efforts to encourage investment firms and companies to consider ESG in their investing and operating decisions.
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