Slate Money: "The Only Way Is Ethics" Edition

Date: August 19, 2017
Host: Felix Salmon
Panelists: Anna Szymanski, Jordan Weissmann
Special Guest: Julia Shin, Enterprise Community Partners

Episode Overview

This episode dives deeply into the intersection of business ethics, public company decision-making, CEO activism, and the burgeoning world of impact investing. The panelists reflect on the recent wave of CEO resignations from White House business councils in protest of President Trump’s handling of white supremacist violence in Charlottesville, examining the responsibilities of corporate leaders in moments of national controversy. The discussion then shifts to whether companies can (or should) have values, the effectiveness of ethical and impact investing, and practical ways for regular investors to make a difference.

Key Discussion Points & Insights

1. CEOs Resigning from Presidential Councils (00:10–14:10)

• The episode opens with the fallout from Ken Frazier (CEO of Merck) resigning from Trump’s manufacturing council, citing moral objections to the President’s statements on Charlottesville.
• Quote:
  “I mean, he's a very fat cat CEO like all of these guys. But like by the standards of fat cat CEOs, he did something quite brave.” — Felix (02:52)
• Other CEOs followed suit, leading to the eventual disbanding of the councils.
• The panelists discuss whether CEOs act primarily out of personal conviction, company values, or pressure from boards, shareholders, and the public.

Important Considerations:

• Personal vs. Corporate Interest:
  “I can't imagine that the CEOs acted unilaterally on a personal term. I'm sure they're advised up the wazoo by their boards and their legal teams and their marketing teams...” — Julia Shin (06:16)
• Company Values:
  Anna and Felix debate whether corporations can truly possess and act according to values or if it’s just a performance for shareholders and the public.

2. Public vs. Private Companies: Values and Responsibility (09:08–13:45)

• Public companies face greater pressure from shareholders, employees, and public scrutiny to uphold certain ethical standards.
• Private companies are seen as less exposed to these pressures—CEOs can act more independently.

Notable Exchange:

• Anna Szymanski:
  “Other people own you. You are not the only person who owns this company. You do have shareholders that have ideas about how this company should be run...” (09:08)

3. Effects of Ethical Stances on Share Price & Profits (10:40–16:29)

• The group explores whether ethical actions—like withdrawing from Trump’s council—affect companies' bottom lines.
• There's skepticism about the real impact of consumer boycotts versus employee unrest.
• Quote:
  “You are the steward of a company and if people are now connecting your company with something they find absolutely reprehensible, that could definitely impact...your bottom line.” — Anna (11:36)

4. Shareholder Activism and Divestment (14:10–20:03)

• Is it important for investors to avoid buying stock in companies whose values they disapprove of?
• The consensus: Divestment may not materially harm the company but can be a personal moral stance.
• Felix:
  “Divesting is great and you should do it if that's something you believe in, but it will have no actual effect on the company...” (16:29)

5. Impact Investing—What Is It, and Does It Work? (16:30–35:14)

Definitions & Distinctions:

• Negative Screening: Avoiding ‘bad’ companies.
• ESG (Environmental, Social, Governance) Investing: Screening for companies that operate well, not just what they do.
• Impact Investing: Deliberate, measurable pursuit of both social/environmental and financial outcomes.
  • “The industry's definition is it's any investing that has intentionality around both the financial return as well as the social return...” — Julia Shin (38:02)
• Double/Triple Bottom Line: Combining financial, environmental, and/or social goals.

Do Ethical Investments Outperform?

• Debate about whether B Corps and similar models can thrive in public markets.
• Anna argues that equity markets expect growth and profitability; voluntary restrictions may hamper this.
• Julia contests the assumption that mission-driven firms can’t grow; cites cases where risk-adjusted returns are possible.

6. Does Buying Ethical Stocks Make a Difference? (28:20–35:14)

• Question: Does buying a share of a “good” company actually help that company?
• Macro-level Insight:
  “The more investors actually invest in companies like that, we actually create a market that's a little bit more ethical, that's more, that's expecting more of the companies...” — Julia (31:30)
• On the micro level, individual transactions rarely move the needle; collective action can shift markets and corporate behavior.

7. Impact Investing in Practice (35:14–48:31)

• Felix challenges Julia: Why aren’t there more direct, accessible opportunities for individual impact investment?
• Julia details obstacles: Private market illiquidity, lack of clearinghouses, the gatekeeping role of financial advisors.
• Suggestions for retail investors:
  • Seek out community development financial institutions (CDFIs).
    “CDFIs have had a 30 year history of very low defaults...they are starting to get S&P ratings and trying to tap into capital markets for publicly listed debt instruments.” — Julia (44:15)
  • Credit union certificates of deposit.
  • Donor-advised funds can direct investments to impact projects.

Notable Quotes & Memorable Moments

• On the public/private divide:
  “There's something about going public which forces you to grow sort of public spirited values in the way that private companies don't.” — Felix (08:28)

• On the limitations of ethical public investing:
  “If the decision whether or not to buy the stock does not change the share price...then is there any way in which I can believe that I am improving the world by buying the stock?” — Felix (32:16)

• On the practical barriers to impact investing:
  “There is no clearinghouse or market exchange where all these investments are available for you...that is one of the challenges of impact investing.” — Julia (47:44)

• On perception of impact investing returns:
  “There's that perception around impact investing that you are actually giving up something when you're engaging in impact investing, that you couldn't possibly achieve both the returns as well as social impact.” — Julia (42:36)

Important Timestamps

| Timestamp | Segment/Topic | |------------|------------------------------------------------------------| | 00:10 | Episode intro/topics, CEO resignations | | 02:52 | Ken Frazier’s resignation and its impact | | 06:16 | How CEOs make decisions—personal vs. institutional factors | | 09:08 | Differences between public and private companies | | 13:46 | Employees, boycotts, and shareholder pressure | | 16:29 | Shareholder activism and ethical divestment | | 18:04 | Definition of ESG and impact investing | | 22:22 | Debate: Can profit, growth, and ethics co-exist? | | 31:30 | Does investing in ethical companies make a real difference?| | 35:14 | Direct impact via impact investing | | 39:07 | How affordable housing investments work | | 44:02 | CDFI investment opportunities for regular investors | | 47:44 | Systemic barriers in accessing impact investments |

Numbers Round & Closing (49:52–end)

A classic Slate Money numbers round, with statistics reflecting current events in business, philanthropy, and humanitarian crises:

• 8.3 million: Number of US families at risk of losing their homes due to rental burden (Julia, 49:52)
• $1 million: James Murdoch's gift to the Anti-Defamation League—a high-profile, public stand against hatred, but also a ‘reputation laundering’ move (Jordan, 50:50)
• $722 million: Box office for the Chinese blockbuster Wolf Warrior 2, highlighting the rise of Chinese popular cinema (Felix, 52:54)
• 17 million: Number of people in Yemen needing food aid—the world’s largest humanitarian crisis, with a reminder of the limits of private aid versus the necessity of governmental intervention (Anna, 54:25)

Conclusion

The episode provides a nuanced exploration of business ethics, arguing that while corporate leaders and investors might aspire to “do good,” practical and structural obstacles (profit expectations, market pressures, illiquidity, confused intermediaries) limit the scale of impact, especially for average investors. Nevertheless, the growing interest among institutional and retail investors alike signals an ongoing shift in business and finance priorities.

Final tribute:
“Thank you for having me.” — Julia Shin (56:02)

For listeners seeking to make their money matter (ethically), the episode offers both a sobering reality check and a roadmap toward emerging impact opportunities.