Why Sexual Harassment Matters to Investors
It poses legal, financial, and reputational risks that investors are increasingly focusing on.
U.S. investors overseeing around $10 trillion in assets now incorporate nonfinancial factors such as environmental, social and governance metrics in their decision making. For both corporate boards and investors, thinking about issues like child labor or climate change has become mainstream.
Yet thinking about sexual harassment has lagged behind. An October study by theBoardlist and Qualtrics found that 77% of boards hadn’t talked about sexual harassment, 88% hadn’t implemented a plan of action as a result of recent revelations and 83% hadn’t evaluated the company’s risks when it came to sexual harassment.
Their most commonly cited reason for inaction? A perception that sexual harassment wasn’t a problem at the company.
.. Then there is the loss of valuable assets. Mr. O’Reilly at Fox, Kevin Spacey at Netflix, and Matt Lauer at Comcast’s NBC were central to their companies’ success.
.. Advertisers, attuned to the new landscape, are paying close attention. “That helps explain why NBC pulled the plug so quickly,” on Mr. Lauer, says Jon Hale of Morningstar. “They don’t want to take the reputational hit of a long, drawn-out process that could cost them viewers and ad revenue.”
.. sexual harassment can be a slow, costly drain. A 2007 study found that it has a negative effect on employee recruitment and retention, increases sick leave costs, and lowers productivity. Lost talent and ideas are more difficult to quantify. But research shows that gender-diverse companies deliver higher returns on capital and lower volatility.