Instant Karma Newsletter 8.31.20
  • The Dow Jones Industrial Average’s replacement of Exxon with “stakeholder capitalism” champion is more than symbolic. It signals the start of a new era of the Dow, where technology’s power is growing as fossil fuels’ strength shrinks.

This article is part of the daily Karma newsletter. To get the whole newsletter delivered to your email free every morning, subscribe here.

The new era of the Dow Jones Industrial Average begins today — one that shows the increasing power of technology and the decreasing importance of fossil fuels to the economy.

Exxon, which had been the longest-tenured member of the Dow after its inclusion in 1928 as Standard Oil of New Jersey, has been replaced by tech giant In 2013, Exxon was the largest U.S. company with a market value of more than $415 million. However, in recent years, it has been surpassed by tech companies like Apple, now valued at $2 trillion, and Amazon, as its value has dwindled.

“Big Oil has fallen,” May Boeve, executive director of activist group, said in a statement after the Dow’s announcement. “Exxon’s deep fall today is another powerful reminder of how fossil fuels are too volatile to be the basis of a resilient economy.”

The Dow shake-up — its first major move since 2013 when Goldman Sachs and Nike were added to the average — was caused by Apple’s four-for-one stock split, which also takes effect today. The reduction in the price of Apple’s shares required the Dow to rebalance its benchmark stocks to reflect the relative strengths of various sectors. In other changes, biotech company Amgen is replacing pharmaceutical company Pfizer and aerospace company Honeywell International will replace aerospace company Raytheon.

However, for impact investors, replacing Exxon with Salesforce, which is outspoken about its commitment to sustainability, is more than symbolic. Since the Dow announcement and its earnings release, Salesforce’s stock price is up about 30%.

“This is a victory for stakeholder capitalism,” Salesforce CEO Marc Benioff told CNBC when discussing the company’s 29% revenue growth in 2Q of 2020. “We did a great job for our shareholders this quarter, but we also did a great job for our stakeholders, as well. This is a moment when we need to be thinking not just about how to serve all of our customers, but also how to take care of our communities because they are in so much pain.”

Here’s what else we’re watching this week:

TIPPED WORKER PROTEST (Monday): Tipped workers, who are allowed to be paid below minimum wage because gratuities are meant to supplement their incomes, will protest in New York’s Times Square and Chicago to seek an end to the practice. They will unveil a 24-foot “Elena the Essential Worker,” inspired by Rosie the Riveter from World War II, and a recent study from One Fair Wage and The UC Berkeley Food Labor Research Center that shows tipped workers are more likely to experience poverty and be subjected to sexual harassment.

PAYROLL TAX “HOLIDAY” (Tuesday): Theoretically, under President Trump’s executive order, payroll tax for those making less than $104,000 a year would stop being collected by employers starting Tuesday. However, because the president cannot make that cut permanent without Congressional approval, those taxes would have to be repaid next year by both the employer and the employee. And if, for some reason, the employee doesn’t pay it back because, say, they got laid off from the company, the employer would have to pay it back. This uncertainty is making many employers worried about stopping collection of the payroll tax until the confusion gets cleared up.

“TENET” RELEASE (Thursday): The first blockbuster of the pandemic era arrives in American theaters Thursday — director Christopher Nolan’s C.I.A. thriller starring John David Washington and Robert Pattinson. But the biggest question about it won’t be whether or not it’s good, but whether or not it’s good enough for people to venture out into movie theaters again. The answer to that will explain more about the future and timing of the U.S. economic recovery than it will about Nolan’s career.  

In case you missed it

Investors want to hold the McDonald’s board accountable for approving ex-CEO’s severance package. Renewable energy investment in emerging markets becomes a growth area. How fighting “fake news” turned profitable in the pandemic. It’s tough for Black entrepreneurs to get into the legalized cannabis industry, even when laws try to give them an advantage.

Levity break

The first collaboration between IKEA and LEGO remarkably requires no assembly.