Superstar firms: Big and bad, or big and beautiful?
A huge, faceless corporation ruthlessly exploits downtrodden workers and plunders the planet’s natural resources in the single-minded pursuit of profit at any cost. Until one maverick hero fights back against the system…
Sounds familiar? It’s the plot of many a dystopian future film or book, from Brave New World to Avatar and countless others. So far, so sci-fi. But is this just fantasy or is there an element of prescience of the growing power of the superstar companies?
Of course, people are naturally suspicious of highly successful businesses. How could they possibly have achieved such dominance without indulging in some unethical practices? And is their sheer size and power making them impervious to scrutiny and regulation?
The superstar firms in the dock
For investors looking for stocks that balance performance with responsibility, superstar companies present a dilemma. Few companies, especially large ones, are entirely virtuous. An assessment has to be made on whether their contributions to the economy and society in general outweigh occasionally questionable governance and business practices.
So first: the case for the defence. There’s little doubt that superstar companies have democratised markets and given consumers more choice, more capabilities and lower prices. Think how Amazon has spawned thousands of small start-up businesses that depend on its platform to trade. Think how Apple empowers people to be creative through technology and how Google and the Internet have liberated the marketplace and thereby lowered prices. All are making positive contributions to our lives.
These companies are also massive employers. Entire communities and millions of people depend on them for their livelihoods and they contribute enormously to public funds. According to Apple, it is currently the world’s largest tax payer, paying over USD 35 billion in the last three years in corporate taxes alone.
Now for the charge sheet. Some superstars have been accused of using their dominant position in the market to keep wages low and force down the prices they pay suppliers. Others have used their political influence to avoid or dilute regulation. In spite of heavily promoting their green credentials, their records on the environment are often patchy at best. And more and more, governments are questioning some of their more ‘creative’ accounting practices. Indeed, some European countries are instituting a ‘tech tax’ on the US tech giants to counter this, a move that is threatening a trade war with Washington.
Engaging with superstars
So, what can the ‘responsible’ investor do to ensure that the superstar companies they are investing in truly have a heart. At BNP Paribas Asset Management, sustainability is one of the pillars of our investment philosophy, so we scrutinize companies more than many:
We use our influence as a major investor (and thus as stewards) to direct companies towards a sustainable future, talking to them, working together and monitoring their corporate governance.
We establish a relationship with companies, have dialogue with them to encourage sustainability and ethical practices at every level of their business.
As members of the Global Network Initiative we monitor the tech giants on civil rights, privacy, access to data and freedom of individual expression.
The investor’s role
The debate will rage on and there are strong opinions on both sides. Is the primary role of a company to keep its shareholders happy or should it have a wider focus on being a positive influence on society as a whole? The answer, of course, is not black and white. Few superstar companies have an unblemished record and few are as villainous as they are often painted. It’s up to us, as responsible investors, to keep questioning them and making sure sustainability and responsibility stay at the top of their agendas.
For more insights on superstar firms and the implications for investors, visit Superstar Economy.
Disclosures
The above-mentioned securities are for illustrative purpose only, are not intended as solicitation of the purchase of such securities, and does not constitute any investment advice or recommendation.
Follow us
YOU MAY BE ALSO INTERESTED IN
X
GET IN TOUCH
To find out more about the investment themes discussed here, please complete the form below.
SUBSCRIBE
Get insights straight to your inbox.
Information dedicated to professional investors
This website is launched and published by BNP Paribas Asset Management, as defined at the bottom of every page of the website (the “Company”) Opinions on this website are the judgement of the Company, at the time specified and may be subject to change without notice. The Company is not obliged to update or alter the information or opinions published on this website.
By accepting this disclaimer as set out below, you acknowledge its content as being the mutually agreed terms for your visit of and the use of this website. Whereas the term “website” includes all content and data provided and all sub- and micro-sites of this website. Further, as a user of this website, you acknowledge, that you are responsible for ensuring that the legislation applicable to you in your jurisdiction permits you to consult this website and you represent and warrant that you have the necessary means and skills to access this website and use it in the intended manner only. This disclaimer is subject to changes without prior notice. If any of the provisions of this disclaimer are judged to be illegal or unenforceable, the continuation in full force and effect of the remainder of them will not be prejudiced.
Certain sections and / or pages of this website contain separate and / or supplementary conditions, including separate disclaimers, which apply in addition to this disclaimer and any separate and / or supplementary conditions. In the event of discrepancy between this disclaimer and any separate and / or supplementary conditions, the separate and / or supplementary conditions relating to the sections or pages of this website will take precedence.
Site Contents
The information provided on this website is for general information purposes only. It is not intended to solicit the subscription of or the sale of any financial instruments, products or services. In no event shall the content of this website be deemed to be investment advice with respect to any financial instruments or investment services. In addition, the presentation of any information on financial instruments or investment services in itself does not allow the making of a contract and should not be construed as an offer or placement of any financial instruments, or solicitation for the purchase or sale of any financial or investment services to any persons in any jurisdiction.
The Company is authorised and regulated by the Financial Conduct Authority as an investment firm. The Company does not offer or purport to offer any direct lending or credit facilities to UK borrowers in connection with the SME Advanced Solutions platform or otherwise. Any potential borrowers should note that non-consumer loans and similar credit facilities are not regulated investments under applicable UK law and that non-consumer lending is not a regulated activity in the UK.
The Company disclaims any liability for any decision made on the basis of any information contained on this website. Potential investors and other market participants are encouraged to consult their own investment or financial advisers in connection with the purchase of any financial instruments or investment services or the entry into any borrowing or similar arrangements.
Exclusion of Liability
The Company including its parent company, subsidiaries, associated entities, directors, employees, representatives or suppliers, does not accept any responsibility arising in any way for errors in omissions from the information on this website and does not accept any liability for any loss or damage as a result of any person relying on any information on this website including any information provided by any third parties or by any inability to access this website at any time, except in the event of intentional or serious blame on its part.
Sources
All externally sourced information has been obtained from providers believed to be reliable, but its accuracy, timeliness, suitability and completeness is not guaranteed. For further information on fund(s), please contact the Company.
Links
This website may also contain links to websites which are published by third parties and third party websites may also feature links to this website. The Company has not reviewed any third party websites which refer to this website or to which this website refers for accuracy, topicality and / or completeness. The Company declines any liability in this matter. The fact that a link has been created to a third party website or that permissions have been given to a third party website to contain a link to this website, in no way means that the Company approves or recommends neither any content nor any products or services offered on a third party website. If you visit a third party website by following a link on this website this will be at your own risk.
Intellectual Property Rights
The information and data featured on this website is protected by law. Copyright and other intellectual property rights on this website (including registered and unregistered trademarks, brands, texts, graphics, logos, icons, sound recordings, software, etc.) are owned and licensed by the Company. You may use and / or print off the data solely for the purpose of personal, non-commercial use. You may not in any form or by any means:
• adapt, reproduce, store, distribute, print, display, perform, publish or create derivative works from any part of this website; or
• commercialize any information, financial instruments or investment services obtained from any part of this website;
• use any registered or unregistered trademarks from this website;
without the express prior written consent of the Company.
Privacy Regulations
By visiting this website, information on the access (e.g. date, visited sites, duration, IP-address) can be registered. Such data will be used in accordance with Cookies Policy of the website and will not be passed on to third parties neither for commercial nor for non-commercial reasons. By accessing this website you hereby agree, that the Company and its affiliates may record and process any personal data that you submit and which relates to you for the following purposes: customer management, including new business prospects, management of the contractual relationship, the prevention of irregularities, generating statistics and tests,. You also agree that this data may be passed on to all entities associated with the Company for the same purposes or to other persons in order to comply with any statutory obligation, or in the event of legal interests. You also agree with such notification, should the receiving person or entity be located outside the European Union, regardless of whether an adequate level of protection can be guaranteed for personal data in the country of receipt.
Within the Company and its affiliates, access to any of your personal data is restricted to those persons who need this data in order to fulfil their duties.
Electronic Mail Function
The option to use email to contact the Company is just one of the convenient features offered by the Company. You will be aware of the limitations regarding the reliability of sending and receiving emails, as well as the accuracy and security of email traffic, so you will understand that the Company cannot be held liable for any loss or damage arising as a consequence of queries which are not received, confirmed or processed, or as a result of the fact that your email may be intercepted by third parties. As a result you are expressly advised not to send any sensitive information via email, because it may not be secure. However, if you do so, it will be at your own risk.
Applicable legislation and jurisdiction in law
Your access to, visit to and / or use of this website and this disclaimer are governed by and will be interpreted in accordance with France legislation. The courts of France shall have sole jurisdiction regarding any dispute in this regard, notwithstanding the fact that the Company may choose another court that has jurisdiction regarding a similar dispute in accordance with an applicable item of legislation.