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- Nike has come under fire this week for a new advertising campaign featuring former NFL quarterback Colin Kaepernick.
- The announcement could mean that this is part of an increasingly popular trend in the world of business and investment focused on corporate responsibility and governance.
- Earlier this year, BlackRock CEO Larry Fink encouraged companies to "serve a social purpose."
Nike's decision to make former controversial NFL quarterback Colin Kaepernick the face of his latest marketing campaign could lead to a new trend of companies not only looking to sell their products,
This week, the shoemaker drew attention to the launch of a new campaign featuring Kaepernick with the slogan "Believe in something. Even if it means sacrificing everything.
Nike shares fell 3% Tuesday amid a barrage of criticism of the announcement. Kaepernick has been the most controversial figure in the league since he sat for the first time at the national anthem protesting police brutality against African Americans.
However, the company's decision is part of a growing movement towards more socially conscious corporate and investment behaviors. Corporate funds that respect environmental, social and governance principles (ESGs in the market jargon) attract billions of dollars in investor money while delivering respectable returns.
Nike could then become a highly publicized case study of what happens when a company makes a calculated bet and embarks on a thorny social problem.
"Look at Nike's actions in the coming days, if only because this has just become a case study on how this new brand of social activism is played out in financial markets," Nick said. Colas, co-founder of DataTrek Research. "Prepare for other major consumer companies, including many technology companies, to continue in some form."
Nike's shares recovered some of their losses Wednesday, gaining around 0.4% at 1 pm.
The company has performed exceptionally well, reaching over 27% since the beginning of the year and about 50% over the last 12 months, with a record high on August 22nd. Its main growth market is not the United States. here and is a particularly strong brand among African-Americans. A Statista survey in 2016 showed that Nike was the group's most popular brand.
The quality of the company is important.
Companies were set to be more active early in the year, when Larry Fink, director of BlackRock, the world's largest fund manager with $ 6.3 trillion in assets, said it was time to get involved.
In an open letter issued in January, Fink called for "a new model of corporate governance."
"Society demands that businesses, public and private, serve a social purpose," he wrote. "To prosper over time, each company must not only provide financial results, but also demonstrate its positive contribution to society."
Some investors have clearly expressed their demand for greater adherence to more active social behavior.
Five of the largest exchange-traded funds that monitor ESG companies have injected $ 3.1 billion in cash in 2018, a growth of more than 10% in total assets. The largest beneficiary was the $ 1.23 billion iShares MSCI KLD 400 Social DSI ETF, which recorded net flows of $ 126.5 million and a 7.5% increase since the beginning of the year.
"The broad investment rubric" Environment, Social and Governance "will only gain in importance, at least until the next downturn in the market," said Colas. "Remember, we are plunged into a record bull market for US equities and a remarkably long economic expansion – it's exactly the kind of backdrop where non-financial issues are naturally at the forefront."
"The real test of social activism in conference rooms will come when things are not so good," he added. "Until then, expect to hear a lot more on the subject."
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