Weekly Roundup: The Death of a Salesman, a Megaphone for Mom, and a Target on BlackRock

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Friday
August 12
2016

Weekly Roundup: The Death of a Salesman, a Megaphone for Mom, and a Target on BlackRock

Guns, Gays and … Socially Responsible investing?

The impact of the deadliest mass shooting in U.S. history continues to reverberate throughout American society, and this week it took an unexpected turn. Gays Against Guns, a group formed days after a gunman slaughtered 49 people at a gay nightclub in Orlando in June, launched a campaign on Tuesday demanding that BlackRock, the world’s largest asset manager, divest its stock holdings in the firearms industry. “The money BlackRock has invested in Ruger and Smith & Wesson goes toward the design, manufacturing, and marketing of some of the deadliest weapons sold in the world,” the group’s mass email says. “You are facilitating slaughter, with the June 12 killings of 49 LGBT people in an Orlando, Florida, nightclub being only the most recent.”

The group will start by encouraging supporters to email BlackRock’s leadership en masse. If this doesn’t work, it plans to escalate to more direct confrontation. “We’re not afraid to shame and demonize,” its spokesman says. “We are going to target consumer partners who support both the LGBT community and the NRA and say it has to be us or them.”

The choice to start with BlackRock is both logical and surprising, and it could signal a new turn in socially responsible investing (SRI) that’s either troubling or exciting for the sector – or perhaps both.

With $4.6 trillion in assets under management, BlackRock is one of the biggest shareholders in gun manufacturers like Smith & Wesson and Sturm Ruger. It’s also viewed as an ally of the gay rights movement, publicly supporting same-sex marriage and attaining a perfect score on the Human Rights Campaign’s Corporate Equality Index, which assesses how companies treat their LGBT employees. This might make it uniquely receptive to Gays Against Guns’ argument. And a decision to divest would certainly carry symbolic power, even if it did little to impact the fortunes of gun companies, whose soaring stock would surely be grabbed up eagerly by other investors.

Yet BlackRock’s investments in gun companies are made through passively managed index funds, which are structured to track the performance of the broader market. That means, as a company representative explained in a statement to Fortune, it is required to replicate the holdings of particular indices, in which third-party providers choose the stocks. So BlackRock, not without some justification, seems to be washing its hands of direct responsibility for these investments. Beyond that, its statement referred concerned customers to its actively managed social impact portfolios, which exclude firearms, tobacco and alcohol manufacturers (while also generating more management fee revenue for BlackRock). It seems unlikely that activists will be satisfied with this response.

By helping to broaden the divestment front by linking it to a community whose activism has driven one of the most dramatic social changes in U.S. history, groups like Gays Against Guns could provide a real boost to the SRI movement. But their efforts, like other divestment campaigns, raise some tough questions:

Does divestment actually deliver on its promise to spark change by targeting harmful industries’ bottom lines?
In their efforts to marginalize investments in these industries, could divestment campaigns inadvertently boost the development of a new, inconveniently profitable niche market for “sin stocks” – potentially solidifying the impression that social impact screening implies lower returns?
By taking on the gun industry and its passionate, politically active culture, could they push the socially responsible investing movement closer to politicization?
And should activists distinguish between a company like Smith & Wesson, which manufactures firearms, and one like Walmart, the nation’s leading seller of them – or should both be targeted? How far can these campaigns expand without overextending themselves or trying the public’s patience?

Easy answers to these questions are hard to find. But as divestment grows in popularity and broadens in scope, companies like BlackRock might not be the only ones dealing with the headache.

– James Militzer

Interested in exec ed for #ImpInv? Check out Georgetown @BeeckCenter’s latest pub: https://t.co/ydSIhq1Yxy

— Kate Ahern (@AhernKate) August 8, 2016

High stakes, bad consequences

A Thursday story about a salesman who committed suicide in India gives insight into how drug sales tactics designed to capture a rapidly growing, underserved market might compromise patients’ health, and how corporate social responsibility initiatives can get off track.

Ashish Awasthi, a 27-year-old salesman for Abbott Laboratories in India, stepped in front of a train, leaving a note that said he could no longer bear the pressure of meeting his company’s sales targets. After his death, more than 250 Abbott drug reps in India walked off the job for a day to protest the company’s aggressive sales tactics, and a national drug sales union called for tighter government oversight of the industry.

The New York Times, which recently concluded a six-month investigation, sheds light on a common practice in India: health camps. It said these “industry-sponsored camps typically focus on chronic ailments such as diabetes, thyroid disorders, heart problems and lung disease. Sales personnel do the testing at no charge, and participating doctors get to increase their business by advertising free checkups. In return, the doctors are expected to prescribe the drug maker’s product.”

This raises all sorts of issues, including the potential for kickbacks and whether sales reps could be accused of practicing medicine without a license. There’s also the matter of companies citing camps as fulfillment of their corporate social responsibility – a law requires that companies operating in India contribute to the social good – when in reality, they’re doing the opposite.

An explanation for the pressure and shortcuts is that there’s lots of money involved: India’s drug market is growing faster than 10 percent annually, which is much faster than in developed countries.

The Times offers a revealing look at corporates addressing needs across cultures with very high stakes involved.

– Kyle Poplin

WorldRemit says “draconian” CBN rules preventing remittances to Nigeriahttps://t.co/FZfn2bTx3U @cenbank @AsoRock .Who's agenda is this?

— Abiodun Bello (@Bello_Abi) August 4, 2016

Giving meaning to a business degree

It’s possible to think of many reasons not to become a social entrepreneur, but Emmanuel Faber, CEO of Danone, trumped them all with his commencement address at his alma mater, HEC Paris. And he gets an assist from Navi Radjou writing in FastCoExist.

Faber’s nine-minute speech, which has gone viral on YouTube, counters the isolationism and fear that’s sweeping the planet with a call to action: He challenges the students to pursue social justice by finding their “unique melody that will change the symphony of the world.” (We’re betting that sentence didn’t excite you, but trust us, you’ll get goosebumps when you hear Faber say it.)

Using Faber’s address as a backdrop, Radjou writes about how to use a business degree for social justice. “The straightforward way,” he writes, “would be to become a social entrepreneur and launch a mission-focused tech startup or a small business to tackle important social issues.”

If you’re a social entrepreneur, or you’re thinking about becoming one and need a good reason to explain why, make sure you follow the links above.

– Kyle Poplin

#SOCAP16 ticket prices go up by $200 on Aug. 19 – but you can still get $200 off w/ this code: MP_NextBillion: https://t.co/TIR1adhphB

— NextBillion (@NextBillion) August 12, 2016

Like handing mom a megaphone

A note to all you social entrepreneurs trying to improve global health: nagging works.

That’s the takeaway from a study conducted by Northwestern Medicine and Arogya World. As part of a diabetes prevention effort, twice-weekly text messages were sent to 1 million people in India giving them some mom-like advice: Remember to exercise, eat less fat and more fruits and vegetables. Turns out, a lot of those receiving the texts actually changed their behavior; when compared to a control group, about 40 percent more of them actually lived healthier. (The texts could conceivably get a little annoying, but they’re a gentler way to avoid diabetes, specifically for married men, than this.)

The World Health Organization recently reported that the number of diabetics has almost quadrupled since 1980 to 422 million, and most of them live in developing countries. Why? Basically, because people are getting fatter. Given that scenario, a little pestering seems a small price to pay.

– Kyle Poplin

NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

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