The pandemic has tested all of us like never before, and shareholders increasingly care more about the beliefs and values of the companies that they invest in. We identified trending beliefs and values from S&P 500 companies using our propriety alternative data engine, the Answers API, which processes data sourced from recent SEC filings.
“Corporate social responsibility is measured in terms of businesses improving conditions for their employees, shareholders, communities, and environment. But moral responsibility goes further, reflecting the need for corporations to address fundamental ethical issues such as inclusion, dignity, and equality,” said Klaus Schwab, executive chairman of the World Economic Forum. Shareholder primacy is the idea that firms aim to maximize the interests of shareholders above all else; Schwab, and recent trends, are aiming to redefine this in a way that maximizes the interests of community. In 2020 SEC filing, ServiceNow, Inc notes “progress can be made when we focus on what matters.” And what matters, more than ever, is community.
Corporate governance encompasses the rules and systems that govern how a corporation is run, and who makes decisions that will affect the company, its employees, and shareholders. Many firms cite it as a top priority in terms of beliefs and values. For example, Kansas City Southern notes adding several protections to ensure that they maintain an ethical code of conduct. Microsoft believes that strong corporate governance “plays a critical role in ensuring accountability, earning trust, and boosting our resilience in a turbulent world.”
The world is changing, and a lot of the blame is falling on corporations taking advantage of a lack of federal environmental regulations. Recently, we have seen a shift in corporate attitude, as companies adopt policies of environmental stewardship by choice, not necessarily by legal requirement. Walt Disney is one of these firms, developing measurable goals for 2030, mostly stemming from an in-depth assessment of the areas of their operation that have the largest environmental impact.
How to Kill Creativity details the ways in which a culture centered around control and efficiency can kill creativity and actually be much less efficient. That’s why top firms value creating a culture of freedom, but also of responsibility so things get done. Netflix is a key example of this, noting that “We seek to empower our employees so that they can have significant impact and input into decision making.” Coca-Cola fosters a similar culture, with a “focus on 4 key growth behaviors – being curious, empowered, inclusive and agile.”
Technology itself is the application of scientific knowledge that results in some sort of tool or machinery; inherently, this means that it should serve the world, and this truth is becoming more and more relevant. Alphabet, Google’s parent company, acknowledged this in a recent SEC filing, noting that they should continue “creating products that improve [users’] lives and society as a whole.” Apple took it a step further, saying they are “dedicated to leaving the world better than [they] found it,” and Verizon is working to create “the networks that move the world forward.”
Companies survive by giving people what they need or convincing them that what they sell is something they need. Regardless, the most successful firms are inherently customer service centered. Amazon is perhaps the greatest example of this; every Amazon experience is geared toward convenience and ease, citing a principle of “customer obsession rather than competitor focus.” Similarly, Adobe’s key company value is to empower its customers and creators, and this drives their operations.
Proctor & Gamble recognized the tremendous power and widespread audience they have in a recent SEC filing, noting they are moving to “use our voice in advertising and media to call attention to bias and equality, spark dialogue and motivate change in the world.” This is high on their values list, and sheds light on the power that corporations have in our daily lives.
According to McKinsey, firms with the best corporate cultures and strong ethics, beliefs, and values consistently generate a return to shareholders that is 60% higher than companies with OK values, and 200% higher than companies with little to no ethical foundation (as measured by the Organizational Health Index).
Interested in trying out the Answers API to learn more about top companies’ beliefs and values, along with thousands of other themes? Request a consultation with our team!