Corporate Activism & Portfolios: Here's What Investors Need To Know

Forbes

07-04-2025

An angry shareholder shouts out during the annual general meeting of Credit Suisse bank, in Zurich, ... More on April 4, 2023, following the takeover by UBS of Credit Suisse hastily arranged by the Swiss government on March 19 to prevent a financial meltdown. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)
In today's polarized climate, politics is no longer confined to elections or legislation. It is also influencing how people invest.
From rainbow logos during Pride Month to high-profile donations to advocacy groups, companies are increasingly taking public stances on controversial social issues. This trend, known as corporate sociopolitical activism (CSA), has grown rapidly in recent years, sparking consumer movements, shifts in brand loyalty, and as recent research shows, changes in investor behavior.
But how exactly does CSA impact the average investor? Do personal political beliefs influence how we allocate capital? Researcher, Tim Sturr, and I published an experimental study in the International Journal of Corporate Social Responsibility titled, How Corporate Sociopolitical Activism (CSA) impacts portfolio allocations: an experiment, that offers valuable insights and practical takeaways for working professionals, advisors, and investors who are navigating a financial landscape where social values and financial goals often intersect.
It is important to understand the difference between Corporate Sociopolitical Activism (CSA) and Corporate Social Responsibility (CSR). CSR involves ongoing efforts to benefit all stakeholders, such as environmental sustainability initiatives, fair labor practices, and listening to the needs of the community. CSR acknowledges that natural resources, the community, the shareholder, and the employee all need to be taken care of well in order to create a sustainable business model. These efforts are generally viewed as inclusive and long-term in nature.
CSA, on the other hand, involves highly visible, often partisan stances on divisive social and political issues. Examples include public support for organizations like Planned Parenthood, LGBTQ+ advocacy groups, or religious freedom initiatives. These are issues where public opinion is sharply divided and where a company taking a position can create backlash (e.g., Target, Budweiser).
In our study, nearly 1,500 participants were asked to allocate a hypothetical $100,000 retirement portfolio among four different corporate stocks. Each company had identical financial metrics. The only difference between the companies was in how they engaged with their communities. Some supported neutral causes like food pantries or mobile health clinics, while others were aligned with politically charged issues such as LGBT diversity programs or Planned Parenthood.
Our two key findings from this study are:
The study found that Democrats were significantly more likely to allocate funds toward companies supporting progressive causes, such as LGBT rights or Planned Parenthood. Republicans, by contrast, preferred companies aligned with conservative values, including those supporting religious freedom organizations.
In some cases, portfolio allocations differed by more than seven percentage points depending on the political orientation of the investor. These differences are meaningful enough to influence capital flows and could impact both company valuations and the cost of capital.
The findings confirm what many people have sensed: values-based investing is no longer limited to ESG or faith-driven funds. It has become a highly personal and increasingly political activity.
In general, participants tended to under-allocate to companies involved in political stances, regardless of their political affiliation.
Democrats allocated nearly nine percent less to a company supporting the Religious Freedom Institute, which was expected. But they also allocated less to a company supporting LGBT causes than to one supporting a non-political cause. Similarly, Republicans under-allocated to conservative-leaning CSA firms relative to neutral ones.
This suggests that while political identity plays a role, investors may still view CSA activity (i.e., companies taking political stances) as a potential risk. Prior research supports this notion, indicating that CSA can signal a shift in focus away from profitability toward more unpredictable ventures.
Whether you are managing your personal investments, participating in a workplace retirement plan, or making strategic decisions for your firm, firms taking highly polarized political stances (i.e., CSA) introduces new variables into the decision-making process. Here are three ways to respond:
Many investors evaluate companies based solely on earnings, growth, and valuation. But in an environment where public perception matters, CSA activity can affect long-term outcomes. Use investing platforms that offer transparency around a company's values, partnerships, and community involvement.
Several screening tools now provide filters to identify companies based on social or political engagement, which can help align your investments with your personal principles or avoid risks associated with partisan backlash. A few examples of this include: MSCI ESG Manager, Inspire Insight Pro, and Invest Your Values.
CSA forces investors to confront a deeper question: Should your investments reflect your values? For some, financial return is the only goal. For others, investing creates culture and it is important for investors to be thoughtful about what type of culture they are creating through their investments.
However, unlike traditional ESG investing, CSA often favors one political constituency over another. Investors must weigh the emotional reward of value alignment against potential financial volatility.
Understanding where you stand (and how much weight you place on ideology) will help you make more intentional choices.
If CSA-related risk is becoming a growing concern, diversification remains your best defense. Avoid concentrating investments in companies that are heavily involved in sociopolitical activism, regardless of whether you agree with their views.
For professionals overseeing retirement plans or advising clients, consider including investment options that emphasize neutrality or long-term CSR practices rather than activism. This approach promotes broader appeal and reduces the likelihood of controversy-driven volatility.
Our research makes one thing clear: political affiliation now plays a significant role in how people invest. As companies increasingly step into the public sphere on contentious issues, the effect on capital allocation cannot be ignored.
For corporations, the message is sobering. CSA may strengthen brand loyalty with one group but drive away another. In fact, the study found that firms could face an under-allocation of up to nine percent in portfolio investments because of CSA activity. That is a real financial cost—and one that should be carefully considered in the boardroom.
For investors, the implications are just as important. Your political identity and emotional response to social issues may be influencing your financial decisions more than you realize. In some cases, this alignment may bring a sense of satisfaction. In others, it could introduce unnecessary risk.
Ultimately, the decision of where to place your money is not just a matter of strategy. It is also a reflection of who you are and what you value. As the boundaries between personal belief and professional investing continue to blur, thoughtful reflection and intentional diversification will become more essential than ever.
Because in a world where every dollar can be a statement, it is important to be clear about what you are saying—and what it might cost.