One of the byproducts of the Trump presidency has been the rising prominence of politics in our political psyche. This is due in part to the fact we never know when the President will unleash a barrage of tweets under the cover of darkness. As Philip Rucker and Danielle Paquette at the Washington Post write:

Prolific, indiscriminate and often deceptive tweeting has been a central part of Trump’s public identity for years…

Ben White at Politico has an entertaining new article looking at why the volatility of the commander-in-chief has not translated into additional stock market volatility. White probes a number of reasons why the stock market is seemingly immune to most of Trump’s mood swings, but never comes up with any single, convincing reason for the current relative calm. White writes:

The most disturbing scenario painted by all the Wall Street pros I talked to is that Trump really does pose a massive systemic risk, and markets just can’t see it or can’t price it. Traders on Wall Street have come of age during decades of mostly traditional presidents, from Gerald Ford through Barack Obama; their models and assumptions are all built on an extremely consistent version of American governance. They’ve seen nothing and no one like Trump.

With the current President no longer constrained by tradition, it seems like companies today are getting involved in the political arena with far greater frequency. Daniel Korschun and N. Craig Smith talk about how companies need not treat politics as a ‘third rail.’ This is due in part because history shows that a cohesive approach to business and society whole works for companies. Writing at HBR Korschun and Smith note:

Now, of course, we know that there is no inherent tradeoff between social and financial performance. The two can be mutually reinforcing. A virtuous cycle between social and financial performance is especially strong when it helps to deepen relationships with customers, employees, investors, or other stakeholders by helping them understand the values and motivations of the company.

Barry Ritholtz has been adamant in his recommendation that investors don’t mix their political beliefs and their investing. The current, nearly ten-year bull market is a perfect example that stocks don’t seemingly care much about who is in office. That admonition however does not hold for company management. Ritholtz writing at Bloomberg View:

There is a message here for corporate executives: They must consider who their customers are now, and who they might be in the future. I do not believe this reflects the rise of what some have taken to calling woke capital, but rather, pragmatic business decisions made by people whose bottom line is, well, the bottom line. Expansion plans, revenue targets and profits appear to drive a lot of these decisions…Companies can take political stands; the results can yield benefits or prove costly. Either way, we’re likely to see more of it in the future.

Another reason why company managements are going to be more sensitive to issues of political import is the growing impact of socially responsible investors. Ironically it isn’t necessarily the rise of investors focused solely on ESG or SRI issues driving this trend. It is the rise of index investing behemoths like Blackrock and Vanguard that feel the need to be more engaged on these issues. Matt Orsagh at the Enterprising Investor writes:

Global investors — many of them large passive asset managers — have realized that if they cannot drive value by selling securities because they are indexed, they can drive value by improving the governance of the companies in which they invest, or by working with companies to eliminate the unique risks that longer-term ESG issues present. In recent years, we have seen large asset managers around the world expand their teams of specialist who are tasked with better understanding these longer-term ESG type issues to engage with companies and create more viable long-term businesses.

That isn’t to say that every institutional investor will engage with companies over the same issues or vote on shareholder proposals in lock-step. What it does mean is that political and social issues that were largely off-the-table for companies are now on the table. It has been shown that companies can have a real impact on policy. The only question is how (and where) that influence will be on display.