June 2017

Can Good Corporate Citizenship Be Measured?

By Andrew Ross Sorkin, The New York Times

A group of strategists at Bank of America’s Merrill Lynch Global Research unit studied several hundred companies over a 10 year period to determine what impact, if any, E.S.G. factors have on stock performance. Results were mixed. Researchers found that investors who consider E.S.G. factors invest in more stable and less vulnerable stocks, but also found that investments in companies that prioritize E.S.G. factors do not necessarily do better than other investments and, in some specific industries, stocks in these companies regularly under-perform when compared to their peers. 

Read the article here and access the full study here.



March 2017

Incorporating ESG Considerations into Engagement Practices

By The High Meadows Institute

Most of the discussion around environmental, social and governance (ESG) investing is about screening out companies that don’t fit specific ESG criteria. But investors who take this approach are missing an opportunity to drive change by engaging directly with companies and pushing for improved sustainability practices. This report explores the different ways investors can engage with companies and provide evidence that shareholder engagement really works — in terms of both profit and ethics.




January 2017

10 for 2017: Investment Themes in a Changing World

By Doug Morrow & Martin Vezer

Sustainalytics released a new report on the 10 key environmental, social and governance (ESG) investment topics expected to create new risks and opportunities for investors in 2017.  Their research found that investors are being drawn towards ESG in because the economy is rapidly changing in a way that makes the materiality of sustainability factors more important. The top investment themes included in the report are increased concerns over data security, sustainability and market trends such as the declining cost of renewable energy, and the push for more corporate transparency.

To access the full report, click here.

September 2016

HBSShareholder Activism on Sustainability Issues

By Jody Grewal, Aaron Yoon, and George Serafeim, Harvard Business School

Institute board member and HBS professor George Serafeim led research published this summer on shareholder proposals related to ESG issues. The study found that overall, filing shareholder proposals is effective at improving a company’s performance on the focal ESG issue across both material and immaterial issues. However, while shareholder activism on environmental and social issues has an effect on corporate management, the research also found that proposals on material issues are associated with subsequent increases in financial value while proposals on immaterial issues are associated with subsequent decline.

The full article can be found here.

July 2016

JACFESG Integration in Investment Management: Myths and Realities

By Sakis Kotsantonis, KKS Advisors, Chris Pinney, High Meadows Institute, and George Serafeim, Harvard Business School

The Journal of Applied Corporate Finance recently published an issue on sustainability and shareholder value. The issue includes this article on ESG integration. In the article, the authors discuss 6 myths around ESG investing and describe the current reality of the major challenges of strengthening ESG integration in mainstream investment.

• Myth 1. The net financial effect of corporate efforts to address environmental and social issues is to reduce corporate returns on operating capital and, along with them, long-run shareholder value.
Reality: Only a relatively small subset of ESG issues are “material” and hence “value-relevant” for each industry. Initiatives and investments designed to manage material ESG issues will produce results (increases in profits as well as stock returns).
• Myth 2. ESG is well on its way to being integrated into mainstream investment management and capital markets.
Reality: Only a small percentage of those assets are taking into account ESG data in a systematic way. The overwhelming percentage is simple ESG screens.
•Myth 3. Companies have little if any ability to influence the kinds of investors who buy their company’s shares.
Reality: Companies can and have influenced their investor base. An example is the case of Shire, which significantly changed their shareholder base within 5 years by using sustainability strategy and integrated reporting to resist excessive pressure for short-term performance.
• Myth 4. It is nearly impossible to do good fundamental analysis taking into account ESG data because the data infrastructure is lacking.
Reality: Progress on data availability and quality has been made over the last few years. Companies, investors, stock exchanges, data providers and NGOs have all played a role in advancing ESG data infrastructure.
• Myth 5. ESG is only about managing risk.
Reality: There are numerous examples of companies that have used ESG integration as an enabler to achieve long-term value and grow their top line (Dow Chemical, General Electric, Unilever).
• Myth 6. Consideration of ESG factors in investment portfolio construction is contrary to fiduciary duty.
Reality: Policy makers and multi-stakeholder initiatives are now working to promote reforms in the legal interpretation of fiduciary duty.

The full article can be found here.

June 2016

McKinseySustaining sustainability: What institutional investors should do next on ESG

This McKinsey piece discusses how mainstream financial institutions have made progress integrating environmental, social, and governance (ESG) factors into their investing process. Specifically, this has included focusing more on materiality, increasing transparency using scorecards and other rating tools, and redefining the term “fiduciary duty” to include ESG issues.

However, there is still work to be done. This article highlights six ideas that can take ESG integration to the next level:

  1. Require uniform ESG-reporting standards based on materiality
  2. Build a shared ESG-rating system for external managers
  3. Work to engage with corporations
  4. Stress-test portfolios for ESG risk factors
  5. Use a long-term outlook to find new investment opportunities
  6. Confront the skepticism that surround ESG head-on

Find the full article here.

February 2016


What do the world’s largest companies say on sustainability?

In January 2016, Manifest, a U.K. proxy voting agency, published the report “Say on Sustainability.”  As their third annual analysis of  sustainability disclosures, their survey found that:

  • 62% of companies’ sustainability reports were not current with the financial year assessed
  • 32% of companies delegated responsibility for sustainability to a board leader or specific committee
  • 50% of companies link some form of sustainability metrics to pay

Manifest has developed a framework that focuses on disclosure and transparency, management processes, risk management, stakeholder relations, audit and verification, and public participation. The framework gives pension funds, asset managers and other stakeholders reports and tools to understand how companies do (or do not) embed sustainability in their governance systems.

A free copy of this report is available by writing to sustainability@manifest.co.uk.

October 2015

Fiduciary Duty in the 21st Century

Fiduciary Duty in the 21st Century

Prepared by: Rory Sullivan, Will Martindale, Elodie Feller and Anna Bordon


This report analyzes the connection between definitions and perceptions of fiduciary duty and responsible investment practices in 8 countries: Australia, Brazil, Canada, Germany, Japan, South Africa, the UK and the US.  The report’s premise is that when asset owners fail to consider long-term investment value drivers such as environmental, social and governance (ESG) issues, they are failing their fiduciary duties.  The report argues that 21st century factors such as globalization, population growth, resource depletion, and the spread of the internet have transformed the landscape of investment risk and return, thereby redefining the scope of the fiduciary responsibility of investment managers.

To some degree, this evolution is already being reflected. There has been increased attention by some governments to ESG issues and a corresponding increase in ESG disclosure requirements for asset owners and investment managers.  At the same time, demand to integrate ESG factors into valuation and investment practices are increasing from market participants and customers.  There is a growing proliferation of ESG ranking and rating agencies along with “soft law” instruments like stewardship codes that “encourage” integration of ESG factors.  And more investment owners and mangers report they are working to include ESG considerations into the investment process.

Despite this progress, a narrow interpretation of fiduciary duty such as protecting the investor’s interest by maximizing diversification and short-term performance is still a powerful reason why asset owners are not fully embracing responsible investment. The overwhelming focus on fast financial returns means that a consideration of ESG issues is challenging as these issues are often seen as involving a trade-off in investment performance. This assumption is especially strong in the US, where any non-financial consideration is perceived as potentially harmful to the value of investment assets despite studies to the contrary. Other factors holding responsible investing in limbo include the complexity of government regulation, differing perceptions on materiality, competing organizational priorities, and the absence of consensus on best practices of ESG integration, to name a few.


On a global level, the report lists the changes that need to be made to ensure all issues effecting investments are considered by the financial sector. A few of these solutions include:

  • Institutional investors publishing their commitments to ESG integration and responsible investment
  • Monitoring how investment managers are implementing these commitments
  • Requiring companies to provide credible accounts of their management of ESG issues and the financial significance of them
  • Ensure that trustees, boards and executives have the knowledge to hold investment managers and advisers accountable on ESG integration

The report also contains a set of specific recommendations at the country level that provide useful guidance tailored to each jurisdiction. Find the full report here.

March 2015

The Integrated Reporting MovementThe Integrated Reporting Movement: Meaning, Momentum, Motives, and Materiality

By Robert G. Eccles and Michael P. Krzus

You don’t often think of reporting as a leadership opportunity, but authors Robert Eccles and Michael Krzus show in their new book The Integrated Reporting Movement how a dedicated group of NGOs, companies and investors are making integrated reporting an increasingly important tool for helping business move towards sustainability that benefits both shareholders and society.  

Working from their analysis of over 120 companies, the authors demonstrate how integrated reporting is providing better insight for firms into the relationship between financial and non-financial performance indicators, and how enabling managers to make more informed decisions will lead to deeper engagement with key stakeholders and to more control over reputational risk.  

The book highlights how integrated reporting is still very much a work in progress, but a movement that is maturing rapidly. We learn how the frameworks and standards emerging today have developed and are evolving, in addition to the practices and technology that leading firms are using to create value from integrated reporting. The book provides insight into the combination of market and regulatory forces that are driving the move to integrated reporting and what will be needed to speed its adoption. 

The authors make their own suggestions on how to speed adoption: their first proposal is a Statement of Significant Audiences and Materiality, an annual board of directors statement that provides insight into the board view of ESG risks and opportunities for the firm.  The second, the “Sustainable Value Matrix,” is a tool to help managers translate this statement into management decisions. 

December 2014

The Shifts and the Shocks

The Shifts and the Shocks: What We’ve Learned – and Have Still to Learn – from the Financial Crisis

Martin Wolf, the chief economics commentator for The Financial Times, uses his latest book to analyze the most recent financial crisis, focusing on the global economic conditions that influenced the meltdown. Specifically, he looks at the free flow of capital as one of the primary culprits, in addition to flawed monetary policy and unregulated central banks.  Wolf ends the book with ways government, business and financial leaders can help prevent future crises from happening again. His recommendations include preventing companies from accumulating cash, and a financial disintegration of international banks.




November 2014

Business and SustainabilityBusiness and Sustainability: Between Government Pressure and Self-Regulation

Edited By Achim Lang and Hannah Murphy

Demands for business to be regulated by sustainability policy have been bubbling up around the globe, raising questions about the intersection between sustainability and business processes. India’s new mandatory corporate responsibility law is one example of different players, including government and other third parties, establishing business regulations as a way of addressing this intersection. The book Business and Sustainability looks at the complex economic, social, environmental, and cultural issues challenging business activities today. In identifying the types of business responses to these issues, the book aims to provide a balanced perspective of business as both a problem causer and problem solver. The end result is a comprehensive framework to study sustainability and business in an interdisciplinary way. 



September 2014

Corporate Responsibility Coalitions

Corporate Responsibility Coalitions: The Past, Present, and Future of Alliances for Sustainable Capitalism

By David Grayson and Jane Nelson

Corporate Responsibility Coalitions begins by chronicling over 100 national and international business-led corporate responsibility coalitions. Authors David Grayson and Jane Nelson consider the forms corporate action have taken over the past several years and how these coalitions have worked towards establishing practices and institutions that promote sustainable capitalism. They end their analysis by focusing on the future development of these alliances.

To understand High Meadows Institute’s perspective on the role of business in society, click here.


June 2014

The Second Machine AgeThe Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies

By Erik Brynjolfsson and Andrew McAfee

MIT professors Brynjolfsson and McAfee describe the second machine age we are experiencing today as one of explosive productivity due to new, ever-advancing technological capabilities. The societal effects of this machine boom include allowing consumers to buy a more diverse range of goods and services at lower prices, while simultaneously creating great wealth for a few top entrepreneurs and investors of new machines looking to gain competitive advantage.

The economic effect of the current machine age has been the decoupling of jobs and income, the authors argue. They make the case that our digital economy has led to higher unemployment and rising income inequality, and that to make the transition from the first to the second machine age easier, the US education system must move from it’s industrial focus on reading and math to skill sets more suitable to working with smart machines and new technology. Finally, the authors believe that the best way to deal with the inescapable income inequality resulting from fast technology changes is for the government to provide a minimum income to all workers.

To read more on High Meadow’s perspective on how machine intelligence will impact our economy and society, click here.

May 2014

Collaborative GovernanceCollaborative Governance: Private Roles for Public Goals in Turbulent Times

By John D. Donahue & Richard J. Zeckhauser

This book focuses on the growing struggles public institutions, specifically governments, have in meeting citizens’ needs and expectations. Collaborative Governance suggests that there are multiple lessons to be learned from the flexible, adaptable private sector, and that public-private partnerships could be the key to addressing society’s changing demands for public goods and services.

Written by Harvard Kennedy School professors, this books shines more light on the collaborative partnership debate around shared governance.

To read more on High Meadow’s perspective on the future of the private sector’s role on collaborative governance, please click here.