The answer to the question is usually almost automatic: its shareholders.
That is the logical answer within the Market System, in which private property is a basic premise. However, does the average saver investing in their pension fund for the future really know where their savings are being invested? The double parameter of profitability versus risk goes some way to defining and guiding the choice, but in exactly which companies? Probably there is no real certainty. Are you investing in the arms industry? In a tobacco company? Do you care?
Let's suppose you do care. How can you communicate your preferences to your fund manager?
In this respect, if you do care, you can let it be known that you don't wish to invest in certain sectors and, if the manager is well informed, he or she will advise you about “ethical” or “sustainable” funds. However, they will mostly try to avoid this difficult conversation about why some funds are “ethical” and the rest don't fall into this category, a conversation that may well come down to a question of what the term ethical means for the financial entity to which you are handing over your savings. Obviously, this is not the kind of conversation fund managers want to get involved in unless they have a good grounding in the subject.
Let's suppose that they are well trained and they give you advice on these types of fund, but what then if the saver not only wants to save the world by not investing in those kinds of companies but also wants to criticize “polluting” companies, for example, at the one time in the year when shareholders are able to have their say and vote at the Annual General Shareholders' Meeting (AGM)?
Can this be done? The representative of the fund manager at the AGM can vote one way or another in response to an environmental question; however, if their percentage of the company's capital is made up of the sum of many savers who may have differing points of view, what voting position should they take?
These are just some of the challenges that the financial system has to deal with for shareholders really “to be in charge of running companies”.
*About the author:
Joaquín Garralda is a professor at IE University, a specialist in strategy and focused on the area of Corporate Social Responsibility. He is a speaker at several conferences and programs, and also acts as a driving force for CSR from various platforms. Chairman of Spainsif and Chairman of the Ethics Committee of the MicroBank Ethic Fund (Grupo Caixabank). He is a regular contributor to the leading economic information media in Spain and Latin America.