Majority of High Net Worth Investors Say They Consider a Company’s Handling of Pandemic Layoffs When Weighing an Investment

In the wake of COVID-19 and the social justice movement environment, wealthy investors are paying much more attention to the social element of ESG, specifically how companies treat their employees and respond to political issues. According to a recent survey by Crossmark Global Investments, a leading provider of values-based investment solutions, 59% of investors say their decision to invest in a company would be impacted if that company made significant layoffs due to the pandemic, but the management team did not take pay cuts.

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The nationwide survey of high net worth investors revealed findings about how investors view a company’s actions when making investment decisions. More than half of investors surveyed (56%) said they are paying more attention to how companies treat their employees this year. Investors also place a high level of importance on corporate actions taken relating to sexist and racist remarks made by a company’s employees.  More than half of millennial respondents (ages 18-34) said that an employee should be terminated for making a racist (61%) or sexist (55%) comment. Within the baby boomer generation (ages 55+), less than half of the respondents said a person should be terminated for making a racist (38%) or sexist (32%) comment. This was more pronounced among women, with roughly half (47%) of female respondents across all age groups saying they would be less likely to invest in a company that did not terminate an employee for those actions.

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“The events of this year have shed a new light on how companies treat employees and handle certain situations. Investors are paying more attention to the ethical standards of a company when making an investment decision” said Michael Kern, President & CEO of Crossmark. “While most of our clients at Crossmark are invested with us because they prioritize investing based on their values, it’s wonderful to see investors starting to take action more broadly across the board.”

Companies Response to Political Issues Impacts Investor Decision Making

In addition to paying attention to how companies handle inappropriate behavior by employees, three-quarters of investors indicated that a company’s response to political issues plays a large role in whether or not they will invest in the company.

79% of investors over the age of 55 stated they are more likely to let a company’s response to political issues impact their decision to invest in the company. Millennial investors also place a large emphasis on how a company responds to political issues, with 69% saying it will impact their investment decisions.

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