Tools to assess corporate performance and enhance investment decisions
Income inequality is a normal feature of a free market economy. However, in recent years, it has been on the rise in most developed countries and has reached relatively high levels, especially in the US. Extreme income inequality affects economic growth prospects and societal stability. It also impacts business models, corporate profitability and value creation.
Our report provides insight into the investment implications of this socio-economic phenomenon. It offers a comprehensive review of the facts, data and economic analysis related to income inequality, and establishes the relationship between the macroeconomic perspective and individual investment decisions.
We have identified two simple tools that can help investors estimate the consequences of their investments regarding income inequality. The first is a check-list of indicators and questions to help assess companies’ human capital strategies in the perspective of high inequality. The second, related to the external socio-economic impacts of business activities, opens the debate regarding companies’ awareness of their influence on the local economy.