Leveraging Universal Ownership to Achieve the SDGs

Companies often cite responsibilities to shareholders to justify socially harmful behavior. However, for highly-diversified large institutional investors, one company’s profit-maximizing negative externalities expose overall returns to risk, insofar as externalized costs (environmental or otherwise) generated by some companies are ultimately borne by others.

These institutional investors might then be thought of as “Universal Owners” of the economy, and have a clear financial interest in the enduring health of the overall economy in a way that individual companies or less diversified investors may not. They can exercise their influence as shareholders to spur and support improved conduct through active shareholder and board advocacy at annual meetings.

CCSI is researching the role that universal ownership can play to advance the SDGs. This includes better understanding the materiality of major sectoral externalities on other areas of the economy, and the powers of shareholders to shape the practices of their holdings.