Billionaire activist investor Bill Ackman, the CEO of the $13 billion hedge fund Pershing Square Capital, made a case that capitalism is "the most powerful potential source" for solving society's biggest challenges — and ESG investing is ushering in that change.

"With the benefit of substantial philanthropic and investing experience, I have come to believe that capitalism is likely the most powerful potential force for good in addressing society's long-term problems. A successful business operating ethically and sustainably can create many thousands of high-paying jobs, deliver high long-term returns for pensioners, long-term savers and other investors, and provide goods and services that materially increase its customers' quality of life, broadly defined. That said, capitalism is far from perfect," Ackman wrote in a shareholder letter published on Monday.

Ackman, 54, a high-profile activist investor usually known for picking up large stakes in publicly-traded companies and effectuating corporate change, pointed to the elevated importance of environmental, social, and governance (ESG) issues boardrooms and managements need to examine and tackle.

"We believe that good ESG practices are fundamentally aligned with running a successful business. As consumers and other corporate customers have become increasingly educated on matters of ESG, they have begun to avoid companies that contribute to climate change or do not treat their employees well, while rewarding companies with their business that have sustainable and responsible policies. Similarly, a growing number of investors have become increasingly concerned about the risks of companies which do not take ESG issues seriously. These investors avoid investing in companies which do not meet high ESG standards, reducing the valuations and investment returns of these businesses, negatively impacting their cost of capital," Ackman added.

Ackman, who now deploys an ESG lens to evaluate investment opportunities, explained that as investors move capital away from companies that score poorly on these environmental and social issues and into firms that do better for society and the planet, Pershing Square "can help accelerate this process" with its long-term approach.

"Our focus on business quality has largely enabled us to avoid investments in businesses which make products or deliver services which we do not believe to be desirable, which treat their employees poorly, and/or which have long-term financial and legal risks that are a consequence of their negative externalities. We believe that this approach has helped us to avoid losses and generate profits by identifying great businesses that have contributed to our long-term investment returns, and by avoiding others which would likely have generated losses in the portfolio," Ackman wrote, noting, though, that Pershing Square has made mistakes in the past where it "failed to fully consider certain ESG shortcomings in a company's approach to business."

Bill Ackman, chief executive officer and portfolio manager at Pershing Square Capital Management, speaks during the SALT conference in Las Vegas, Nevada, U.S. May 18, 2017. REUTERS/Richard Brian
Bill Ackman, chief executive officer and portfolio manager at Pershing Square Capital Management, speaks during the SALT conference in Las Vegas, Nevada, U.S. May 18, 2017. REUTERS/Richard Brian
To be sure, Ackman said they don't have a uniform set of factors when evaluating ESG, but instead, the due diligence process depends on the company and the sector.

Among the Pershing Square portfolio companies with stellar ESG practices are Agilent (A), Starbucks (SBUX), Lowe's (LOW), Howard Hughes Corporation (HHC), and Chipotle (CMG). Last year, Ackman's Pershing Square Holdings, the hedge fund firm's publicly traded vehicle, posted its best year ever, returning 70.2%, far outpacing the broader market. The fund is up 5.9% year-to-date as of March 23.
"Each of our companies' ESG initiatives generates a materially positive benefit to society, and fosters customer and stakeholder loyalty, which contribute to the creation of shareholder value," Ackman added.

The long-term shareholder added that Pershing Square could be "highly supportive of investments that reduce short-term earnings, but increase a company's long-term net present value."

In the letter, Ackman acknowledged that he used to think "business was about making money, and philanthropy was about doing good." He noted that the Pershing Square Foundation had contributed hundreds of millions to addressing inequality, education, health care, social and criminal justice, and more. Earlier this month, Ackman, an early investor in Coupang (CPNG), donated 26.5 million shares of the South Korean e-commerce giant stock, worth more than $1.3 billion at the time, to the Pershing Square Foundation, a donor-advised fund, and another unnamed non-profit.

"Despite these growing resources and the excellent works of many important organizations the Foundation has supported, over time it has become increasingly clear to us that philanthropy alone cannot save the world. Unfortunately, we cannot rely on governments either," Ackman wrote.

finance.yahoo.com/news/bill-ackman-on-capitalism-and-esg-investing-163654033.html

Daddy is right!!!!!!!

billionaire likes capitalism
shocker!!

I mean the potential is there

The reality is capitalism will run rampant until resources are depleted

nah

then people will have to care by force of nature s***ting back the pollutants we put in

B o o t l i c k e r

yeah #riiiight !!!! Tell ALLL these #commie bootlickers that #daddy ackman is BAWSE!!!

oh yeah? yeah? you like that daddy? oh #yeah daddy. no no #socialism #daddy yeah #daddy

@Synopsis @Sinewave

lol they're gonna ban you again

Synopsis is going to go bonkers when he sees this

please dont tag me in s***head threads

free sinewave 🗣

I don’t get how there can be a whole ass “Socialism Thread” with 3,000+ posts but as soon as someone comes in here supporting a system that actually has statistical evidence to support it they get banned for being a shill. Like why not ban all of the posters in that circlejerk as well?

S*** is so obvious that they ban people they disagree with because the mod who banned me is a hardcore lefty who posts in the socialism thread

Like how can you be a shill for capitalism? Who do you think is paying me to be pro capitalist on a Kanye West forum? George Soros? Bill Gates? Who is the leader of capitalism lmfao???

How is one ideology okay to spew bullshit about over and over again in multiple sections but the opposing ideology isn’t? I would understand if it was something like racism being discussed where there’s a morally correct side, but honestly banning someone because they’re a “capitalism shill” is more “shill-like” of socialism than me supporting capitalism with harmless posts lmao

Oh no, random guy on KTT supports capitalism, people are going to really be in trouble now!

All in ser

A billionaire loving capitalism. What an interesting development...

someone is upset

this gimmick funny asf, keep it up