Politicizing Business is Costly_2024-04-19

Politicizing Business is Costly_2024-04-19

April 19, 2024

Inspire Investing has been actively engaging companies on issues related to de-banking, censorship, DEI/workplace civil liberties, and LGBT activism, among others. Our main goal has been to de-politicize companies and stop them from getting involved in divisive social and political issues that have nothing to do with their core products and services and only end up alienating customers and employees and exposing the companies to unnecessary legal and financial risk.  

In a recent white paper entitled Corporate Political Activism and Shareholder Value, Bowyer Research analyzes corporate performance data from a number of different angles and reaches the conclusion that corporate politicking on divisive social issues “at the very least raises legitimate financial concerns” for investors.  Some of the data cited in the paper includes analysis by Tim Schwarzenberger, CFA, of Inspire Investing comparing return, risk, and risk/adjusted return (Sharpe ratio) figures for Target, Bud Light, and Disney versus their main competitors.  Over all trailing one-, three-, five-, and ten-year periods, all three of these companies have significantly underperformed their peers, especially more recently when these companies have significantly stepped up their political activism.

We thank Bowyer Research for producing this important work and including Inspire’s analysis. The paper supports our concerns about corporate political activism and enforces our approach to Biblically Responsible Investing, which includes engagement on many of these issues.