Our Insights

The role of investors in a changing world

As the post-pandemic world increasingly relies on business to solve key societal problems, investors are challenging companies to adopt longer-term thinking. Dr. Dambisa Moyo, economist, bestselling author and corporate director, shared her insights on the evolving role of investors at a recent RBC Investor & Treasury Services client webinar.

1. De-globalization is gathering momentum and multilateralism is being questioned.

These tectonic economic shifts are exacerbating the ongoing decline in trade activity and cross-border capital flows across the globe.

2. The Ukraine conflict has led to a greater appreciation of energy issues.

Investors are generally acknowledging a more difficult road in the transition to a new energy world, which is likely to include conventional energy sources.

3. Capital allocation is driving corporate success.

The chief executives of outperforming companies are seen to be focusing their attention on where to invest the marginal dollar within their firms.

4. Investors have become more concentrated.

Wall Street’s Big Three asset managers—BlackRock, Vanguard and State Street—together own approximately 22% of the largest US corporations, up from less than 14% in 2008.1

5. Corporate decisions are reflecting investor preferences.

Companies are being challenged to allocate capital based on what is important to investors, including ESG (environmental, social and governance) and technology.

6. Investors have taken on a home bias.

Cost is becoming less of a concern as shrinking trade and growing supply chain issues shift investor attention to the need for reliable and resilient production of goods and services locally.

7. A longer-term focus has emerged.

Investors are adding venture capital arms and increasing their private equity holdings as part of more long-term thinking. Short-term demands of quarterly reporting are contributing to the delisting of public companies and reinforcing this broader view.

8. Ongoing dialogue between investors and corporations is driving positive change.

Public letters from the chief executives of large investors, including the Big Three managers, continue to raise awareness of complex issues such as climate change. These efforts are critical to achieving sustainability.

 

 

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