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An angry shareholder shouts out during the annual general meeting of Credit Suisse bank, in Zurich, ... More on April 4, 2023, following the takeover by UBS of Credit Suisse hastily arranged by the Swiss government on March 19 to prevent a financial meltdown. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)
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In today’s polarized climate, politics is no longer confined to elections or legislation. It is also influencing how people invest.
From rainbow logos during Pride Month to high-profile donations to advocacy groups, companies are increasingly taking public stances on controversial social issues. This trend, known as corporate sociopolitical activism (CSA), has grown rapidly in recent years, sparking consumer movements, shifts in brand loyalty, and as recent research shows, changes in investor behavior.
But how exactly does CSA impact the average investor? Do personal political beliefs influence how we allocate capital? Researcher, Tim Sturr, and I published an experimental study in the International Journal of Corporate Social Responsibility titled, How Corporate Sociopolitical Activism (CSA) impacts portfolio allocations: an experiment, that offers valuable insights and practical takeaways for working professionals, advisors, and investors who are navigating a financial landscape where social values and financial goals often intersect.
CSA Is Not The Same As CSR—And Investors Know It
It is important to understand the difference between Corporate Sociopolitical Activism (CSA) and Corporate Social Responsibility (CSR). CSR involves ongoing efforts to benefit all stakeholders, such as environmental sustainability initiatives, fair labor practices, and listening to the needs of the community. CSR acknowledges that natural resources, the community, the shareholder, and the employee all need to be taken care of well in order to create a sustainable business model. These efforts are generally viewed as inclusive and long-term in nature.
CSA, on the other hand, involves highly visible, often partisan stances on divisive social and political issues. Examples include public support for organizations like Planned Parenthood, LGBTQ+ advocacy groups, or religious freedom initiatives. These are issues where public opinion is sharply divided and where a company taking a position can create backlash (e.g., Target, Budweiser).
In our study, nearly 1,500 participants were asked to allocate a hypothetical $100,000 retirement portfolio among four different corporate stocks. Each company had identical financial metrics. The only difference between the companies was in how they engaged with their communities. Some supported neutral causes like food pantries or mobile health clinics, while others were aligned with politically charged issues such as LGBT diversity programs or Planned Parenthood.
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