Investor activism and ESG no longer an oxymoron?
In a move unusual for an activist fund, Jana Partners has teamed up with pension fund CalSTRS to petition Apple on its social responsibility.
The investors, which collectively hold $2 bn in the iPhone maker’s shares, have written to the company asking it to develop new tools helping parents counter smartphone overuse and addiction in children.
‘It is also no secret that social media sites and applications for which the iPhone and iPad are a primary gateway are usually designed to be as addictive and time-consuming as possible, as many of their original creators have publicly acknowledged,’ the open letter reads. ‘As one of the most innovative companies in the history of technology, Apple can play a defining role in signaling to the industry that paying special attention to the health and development of the next generation is both good business and the right thing to do.’
Although CalSTRS, the second-largest pension fund in the US, is known for its active involvement in investee companies’ governance, it is the first time an activist investor such as Jana has taken a stand on what it describes as a matter of public health.
‘Impact investing seems to be a fair bit smaller than activism as an asset class, but growing a lot faster,’ Josh Black, editor-in-chief of Activist Insight, tells IR Magazine.
Jana, which is better known for its recent involvement in Whole Foods’ sale to Amazon, is seeking to raise a new fund targeting companies that could benefit from a better performance on the ESG front. The fund’s advisory board will reportedly include high-profile members including singer-musician Sting and his wife Trudie Styler, as well as ExxonMobil challenger Sister Patricia Daly.
Venturing into a new area of fund-raising might help US-based activists, which have seen withdrawals over the last couple of years, stay relevant, Black stresses.
It may also prove beneficial, PR-wise, according to Gary Lutin, founder of the UK’s Shareholder Forum, who deems the open letter initiative ‘a very constructive development because it demonstrates that a professionally managed activist hedge fund is focusing on something that supports the foundations of fair business practices. It is good positioning both for Jana Partners’ specialized purpose fund and for its public image.’
Black believes these types of themes are bound to be exploited further by the activist sphere. ‘I think ESG issues will play an ever-greater role in public campaigns as the activists’ core constituency – the institutional investor community – is clearly interested in them,’ he says.