What we’re watching this week: 6/1/21

Coming off a Memorial Day weekend when the United States was doing its best to remember life before the pandemic, we have our eyes on a few trends that jumped out amid the swirl of global and domestic developments.

A solemn anniversary

One year after George Floyd’s murder, the focus is on whether US society has made any real progress on racial equity. The initial signs are less than encouraging: HR 1, which proposes a voting rights overhaul, is stuck in Congress, while states continue to enact new restrictions on voting. The support for Black Lives Matter, which spiked during the protests last summer, has fallen below levels before Floyd’s death. In the immediate aftermath, companies pledged more than $50 billion to promote racial equity and support Black communities, but to date, they have spent just $250 million. Companies can demonstrate their commitment to these issues by weaving the following factors into their policies and programs.

• McKinsey details why the private sector must rethink its role to ensure engagement and investment have a tangible impact.

• Too often, the DEI industrial complex signals intent rather than resulting in programs that actually move the needle.

• According to Deloitte, vocal advocacy for racial equity can also support talent attraction and retention.

Activist investors activate

The economic disruption over the past year, combined with ongoing questions about the role of the private sector, has emboldened activist investors to make their presence known. Despite millions of people losing their jobs over the past 12 months, CEO compensation has emerged from the pandemic largely unscathed—a development that hasn’t gone unnoticed, with investor displeasure at an all-time high, according to Reuters. Meanwhile, Exxon and Chevron both saw activist investors exert their will and promote a carbon-free business model. Companies and their boards are likely to face heightened scrutiny on a range of issues, particularly in the ESG space. But until this attention affects their bottom line or share price, they are unlikely to dramatically change course. Still, boards and top teams must have answers and strategies in place well in advance.

• For companies to fend off activist investors, BCG argues that boards need to adopt a similar mindset.

• Pushback over CEO compensation isn’t a new thing; see this 2003 Money article for a throwback.

• Can such actions translate into changes? The recent experience of McDonald’s suggests the markets don’t care.

Whither crypto

The meteoric rise of cryptocurrency prices has been accompanied by lingering doubts about its stability and applications. Every piece of news that suggests crypto may be here to stay is counterbalanced by proclamations that undercut its legitimacy. China moved to ban its financial institutions from providing services that support cryptocurrency transactions, Elon Musk announced that Tesla would no longer accept bitcoin for purchases due to climate concerns, and HSBC CEO Noel Quinn stated that the bank wouldn’t be trading cryptocurrency or coins. Companies that avoid being too boosterish and clearly articulate their perspective can reinforce their sophistication in dealing with ambiguity on emerging tech.

• Governments are practicing greater oversight, with the US Treasury now requiring transfers of more than $10,000 to be reported to the IRS.

• Volatility will likely continue unabated; as long as one investor can still spark an exponential rise in a cryptocurrency, suspicion may remain prevalent.

• Some institutions are plowing forward anyway—Wells Fargo will offer a cryptocurrency investment strategy for clients.