Sexual violence in the workplace endangers those who have to endure it. It might make the predators’ companies a bad investment, too.
The #TimesUp and #MeToo movements have brought attention to inequality and abuse in the workplace. And with that awareness, questions have emerged about investors’ roles in the problem, according to a report published this week — “Structural Complicity: Sexual and gender-based violence as an emerging investment risk” — from Cornerstone Capital, an investment advisory and wealth management firm. “The burgeoning movement to root out abuse raises the question of whether capital markets participants might be complicit in its persistence,” it said.
“Investors lack access to data regarding the extent of the problem and do not possess the means to gauge the consequences for stakeholders or investment performance,” the report said. “We believe it is incumbent upon investors to demand greater transparency on issues of SGBV (sexual and gender based violence) related to business activity; to hold companies accountable for reducing SGBV; and to incentivize companies to minimize SGBV.”
The report comes as major companies face gender discrimination allegations. A woman at a private investment firm run by Steven A. Cohen, Point72 Asset Management, filed a lawsuit this week alleging she was paid substantially less than male colleagues — 62 cents for each dollar earned by a man with her same experience level. There was also a sexist work environment, she said, including a “no girls allowed” policy at certain meetings.
The firm said in a statement it “emphatically denies these allegations and will defend itself in a more appropriate venue than the media.”
Steve Wynn, the chief executive of Wynn Resorts Ltd. WYNN, +1.31% , resigned this month after reports that he spent decades pressuring his employees to perform sex acts. When The Wall Street Journal reported the allegations, Wynn said, “The idea that I ever assaulted any woman is preposterous.”
Sexual and gender-based violence create risk for companies and their investors in three main ways, Cornerstone wrote in the report: It reduces productivity, it restricts companies’ ability to grow in local communities where they operate, and it causes consumers to limit their interactions with companies that don’t respond to accusations of harassment and violence appropriately. And it also hits the stock price. Shares of Wynn Resorts Ltd. fell 20% in the days after the allegations against Wynn were published.
Awareness of gender-based harassment in the workplace will only grow as more workers are willing to share their experiences online, the authors wrote. Employees have been able to band together to make allegations, after connecting online through shared spreadsheets and even new apps, including ones called The Silent Choir and Callisto.
Some industries may enable SGBV in different ways, such as by relying too heavily on top performers who wield undue influence and power. “Recent news stories highlight harassment in sectors with high levels of human capital, mainly the technology, finance, and media,” the report said. “These stories emphasized that imbalances in power between ‘star players’ and victims is linked to a prevalence of sexual and gender-based violence.”
So what should investors do? Continue to ask questions about companies’ disclosure of sexual harassment and gender-based violence at work. Capital from investors is “inextricably connected” to sexual and gender-based violence now because that capital supports such a wide range of business activities, the Cornerstone Capital report noted. But the full extent of SGBV is unknown, and so are the “potential productivity gains” in a world without it, the report said.