using investments to affect company policy

Avoirdupois

Over recent years, we read of a wide range of what you might call social injustices inflicted on our country and its infrastructure.  I have in mind the growing gap between the richest and the poorest, the increase in privately owned energy company's profits at the same time as rocketing prices, the failure of the water companies to reinvest at levels that protect our networks, the abandoment by the Environment Agency of our rivers and beaches to pollution and sewerage - and all at the same time that boards & ceos appear to be getting colossal levels of remuneration... including, unbelievably, receiving bonuses inspite of letting all us citizens and our country down by failing to improve performance!!
Meanwhile, I'm a modest invester, either indirectly, via my local government pension scheme and also via my own stocks and shares.  Surely there are steps I can take to attempt to influence the way so many of our essential infrastructure companies behave.  Or should I just keep quiet and take the best return I can get and leave behind a country much reduced - a shadow of what it could be, if all these companies invested more generously in our future.  Any comments, dear reader?

DullGreyGuy

How do you propose to influence? Being selective in your investments to consider their ESG policy rather than amount of investment returns? Or investing in the companies you dont like to get a voice at the AGM?

In both cases you need a substantial investment to make your lack of investment painful or to have a chance of your voice at the AGM resulting in a shareholder vote that you win. As noted with the recent press about R&Q even the largest corporate shareholder with 12% of its shares is struggling to get the support it needs to remove the Exec Chairman of the company. 

dunstonh

 Surely there are steps I can take to attempt to influence the way so many of our essential infrastructure companies behave.

Individually, no.    You would need billions of pounds to have that sort of clout. 

Collectively, you can have some influence if you invest with an ESG strategy.

Or should I just keep quiet and take the best return I can get and leave behind a country much reduced - a shadow of what it could be, if all these companies invested more generously in our future.

Ethical and ESG investing has historically led to lower returns than conventional investing.  So, you would need to put your money where your mouth is.

OldMusicGuy

You may remember the Occupy protests of 2011 which attempted to do what you suggest on a collective basis and pretty much failed to have any lasting impact. You as an individual investor have zero power unless you can form a coalition of shareholders that represent a very significant portion of the total shareholding of the company. Which of course you cannot do (unless you are a hedge fund manager in disguise....).

What can you do personally to address the situation you outline? Two things. Like dunstonh says, sell your investments in them. The other is to vote for a party that is going to renationalise electricity and water companies and create an equivalent of the British National Oil Company that we had in the 1970s. All of these were sold off in the 1980s. And you are likely investing in them now through your pension fund.

callum9999

Firstly, there actually is a way you can get people to invest in a company to promote change within. Sites like Tulipshare and AsYouSow are based on this principle and have had actual results (with the caveat I haven't ever used them so aren't necessarily recommending you use them without researching it first). 

And while I otherwise fully agree with everything already said, I'd put a slightly (only slightly!) more positive spin on it. 

Living your life in a moral way doesn't have to rely on there being tangible/visible benefits to society - there is a (limited) level of satisfaction knowing that, although the majority around you aren't doing as much as you are, you are living more ethically.

The impact may also still be there even though it isn't visible as there are many who think the same as you. Things like voting and vegetarianism are other examples where people aren't necessarily acting in unison, and their individual act makes zero difference in isolation, but combined it can make an impact.

OldMusicGuy

You could always support this organisation: https://weownit.org.uk/

Millyonare

Despite media hysteria, the UK has just about the cleanest drinking water on all of planet Earth. By international benchmarks, UK water companies barely make average profit margins.

One unintended consequence of the hysteria is that our UK water bills will likely jump (much) higher in the next 1-5 years, to pay for the perceived vital upgrades of leaky pipes, sewage overflow, etc. Be careful what we wish for.

callum9999

Millyonare said:

Despite media hysteria, the UK has just about the cleanest drinking water on all of planet Earth. By international benchmarks, UK water companies barely make average profit margins.

One unintended consequence of the hysteria is that our UK water bills will likely jump (much) higher in the next 1-5 years, to pay for the perceived vital upgrades of leaky pipes, sewage overflow, etc. Be careful what we wish for.

Huh? The "hysteria" has nothing whatsoever to do with the quality of the drinking water. There are always conspiracy nuts for any wacky topic, but I've genuinely not heard that raised as a concern by a single person.

I'd love to see your stats for "average profit margins" given the overwhelming majority of the world (87% of the population from what I can see) has a publicly owned and run water system. It seems that only Chile and three African countries join England in having a fully privatised system.

Preventing massive water leaks while the UK suffers from regular droughts that are increasing in frequency and severity seems like a fairly rational thing to do. As someone who lives on the coast, I also much prefer it when the sea isn't contaminated with raw sewage. These things could have been improved already at no additional charge with the £2.8bn paid out in profits to private companies last year... But regardless, those are things that are clearly worth paying for so I have no need to be "careful" about wishing that they're resolved.

Millyonare

The Yale EPI index today ranks the UK as the world's no.1 country for sanitation and drinking water. London's River Thames was recently voted the world's cleanest river. UK utility firms' average net profit margin has been below the worldwide utilities' average for 5 of the past 8 years.

Is the UK water system perfect? No. Is it better than the vast majority of the rest of the world? Yes. Will recent media hysteria lead to higher, perhaps doubled, water bills for us all in a few years' time? It's  a fair bet.

dunstonh

Historically, the bulk of the UK's surface water flowed into ditches and ponds.  Then over time, some bright sparks decided that having it flow into the sewage was a good idea.   It may well have been at the population levels of the time.   However, until recently, intensive housebuilding pushed the lot into the sewage means capacity isn't there when there is heavy or persistent rain.

If you look at new build estates being built at the moment, you usually find them running the surface water through ditches and gullies to ponds rather than putting them into sewage.    So, things have returned to the old ways.   The problem is either retrofitting that sort of water system into 20th century builds or increasing capacity.  Neither are easy with the latter being a solution that requires it to be able to handle and store surges.  That would need to be covered/underground and likely be the size of a reservoir in each region.

At the moment, the cost of the fines is tiny compared to the cost it would take to resolve it.

callum9999

Millyonare said:

The Yale EPI index today ranks the UK as the world's no.1 country for sanitation and drinking water. London's River Thames was recently voted the world's cleanest river. UK utility firms' average net profit margin has been below the worldwide utilities' average for 5 of the past 8 years.

Is the UK water system perfect? No. Is it better than the vast majority of the rest of the world? Yes. Will recent media hysteria lead to higher, perhaps doubled, water bills for us all in a few years' time? It's  a fair bet.

What is the purpose in telling me about how clean it is yet again? That is not what the media "hysteria" is about, is not relevant and I've already told you this once.

So you've changed your claim from "water companies make barely average profits" to "UK utility companies make below average utility profits just over half the time", though still haven't provided any evidence of this. Where are you getting this from? The figures I just found show that average UK energy profit margins are 9% and water is 30%... And again, the vast majority of water infrastructure worldwide is publicly owned and operated, so trying to argue that their profit is anything other than far above global standards (where the default is 0%) is absurd.

Why exactly is it a fair bet that water costs will double? You're plucking that out of thin air.