Below are working research papers commissioned by the Institute.

Summary: This report first focuses on public engagement, specifically seeking to shed light on trends around ESG issues. Our research to-date has found that 54% of ESG resolutions are related to social issues. These are largely made up of diversity in the work place, human rights and employee health. 29% of ESG resolutions are related to environmental issues and 17% to governance. The prevalence of social and environmental issues in proposals filed is part of an ongoing growth trend since 2010. Despite their increasing prevalence, voting in favor of ESG related proposals has stayed consistently below 25% on average since 2010, short of the 30% threshold at which a company is expected to consider the issue. The energy sector in the US receives the most proposals for voting.

Summary: The aim of this ongoing research is to examine the practices of top sell-side analysts around ESG integration. To-date, of the 187 quarterly earnings calls where 16 analysts from J.P. Morgan, Morgan Stanley, and Citi asked questions, we identified that 26% of the calls had a question classified either as ESG or as focusing on long-term value creation.

Summary: This paper reviews existing research and examines the impact of corporate sustainability on employee behavior and, thus, organizational costs and revenue, referred to in this paper as the corporate sustainability – employee behavior value chain. The research is meant to support the Institute’s effort to develop a set of standards for measuring and reporting on the impact of sustainability on organizational and financial performance. Measuring corporate sustainability in a manner that predicts financial performance needs to include the corporate sustainability – employee behavior value chain as research has established it affects organizational and financial performance. That is, empirical evidence suggests that participation in employer sustainability programs improves employee engagement, performance, and retention; and, thus, positively affects organizational costs and revenue.

Summary: Key players in the shadow banking sector cut across six segments of activity: consumer lending, small business lending, leveraged lending (loans to non-investment grade businesses), mortgage banking (both origination and servicing), commercial real estate and student lending. To overcome these challenges and fulfill the disruptive potential of the shadow banking sector and digital advice and currencies, a number of breakthrough opportunities are needed, including: achieving true mass market feasibility, better mixing people and technology, coalescing around the open ledgers and increased transparency, going deeper with banking the unbanked, and engaging more effectively with regulatory and policy players.

Summary: This paper focuses on the social finance market, which comprises socially responsible investment (SRI), Environmental, Social and Governance (ESG) and impact investing, and has proven its potential for impressive short-term growth in recent years, rising from $13.3 trillion in total size at the outset of 2012 to $21.4 trillion at the start of 2014. Social finance and its sub-disciplines encompass any investment activity that generates financial returns and includes positive social and environmental impact—with each discipline distinguished by the level of intentional and explicit alignment with ESG attributes.

 

Disclaimer: These are working papers for HMI programs in development and not intended for general circulation.