There is no question that a global framework of strong laws and regulations would be the best way to ensure sustainable supply chain practices. In a fractured global economy, however, with few worldwide or enforced sustainable supply chain standards, progress on better practices will continue to require corporate leadership backed by consumers and the public. In the past…
As the rhetoric on the pushback against ESG in the U.S. heats up, the question now is: does this challenge have a legal basis or is this just about politics? From a legal standpoint, it is becoming clear that the anti-ESG advocates may in fact have a powerful tool in the form of the Sherman Antitrust Act, which generally prohibits agreements between competitors that unreasonably restrain trade and other forms of unilateral business conduct that may have an anticompetitive effect. Of specific concern here is whether participation in ESG initiatives and coalitions that are shaping markets or excluding specific industries…
As part of the pushback on ESG, large institutional investors have come under increasing pressure from conservative states and asset owners for their support of ESG in their investment stewardship and proxy access engagement with companies. As a response to this criticism, Larry Fink, CEO of BlackRock, the world’s largest asset manager, announced on Wednesday a plan to allow BlackRock’s retail investors to vote on proxy battles for the first time. He characterized it as a “revolution in shareholder democracy” that will “transform the relationship between asset owners and companies.” How this will work out in practice remains to be…
To read the headlines, you could easily be forgiven for thinking that climate change and ESG are the number one issue in capital markets. When it comes to equity markets, ESG integration does seem to be fully underway, as the value of global assets applying environmental, social and governance data to drive investment decisions has soared to $40.5tn, representing more than a third of the $95tn equity market in 2020. Whether…
For the last eight years, we have tracked the progress of ESG in our biannual State of Sustainability in Capital Markets report. In that time, we have seen ESG go from the periphery of investment management to a core component of 21st century asset management. From a focus of niche players and discrete investment products, ESG is now central to the investment strategy of many of the world’s largest asset managers and a key component of investment stewardship. Essential to the rapid growth of ESG in investment management has been the concept of ESG financial materiality and the notion that…
From the January 6th attack on the U.S. Capitol to the protection of voter rights to supporting Ukraine by pulling out of Russia, business is increasingly being looked to not only to support social issues such as transgender rights and anti-racism but also to engage directly in defending the institutions of democracy. In the wake of the Capitol attack, for example, Twitter banned Donald Trump and PayPal suspended payments through his website and many companies blocked funding for Republican politicians who spoke in support of the attack. This engagement is welcomed by many but also criticized, with Senate minority leader…
“With great power comes great responsibility” is an old adage that frames well the moral and political leadership challenge now confronting business leaders. Large firms are among the most successful global institutions we have, with over half of the world’s top 100 economies by revenue now global corporate and financial firms with an impact, reach and resources exceeding that of many nations. It is not surprising that in this environment, society is looking to business to take greater leadership and responsibility. Sixty-eight percent of respondents in the 2021 Edelman global survey believe that CEOs should step in when the government…
As experts note in the article above, the chance of achieving net zero by 2050 with the current approach is poor. In terms of governments, the reality is that when COP26 convenes, only one country, the Gambia, will have met its Paris commitments according to the Climate Action Tracker.
The pandemic and growing climate crisis have thrown into sharp relief the critical role large firms now play in society, not just as economic entities, but as key social institutions expected to work with and alongside government to address the myriad of systemic challenges now facing us, from climate change to inequality. In his 2018 letter to CEOs, Larry Fink, CEO of BlackRock, the world’s largest institutional investor globally, summarized this new role for business well: “We… see many governments failing to prepare for the future…As a result, society increasingly is turning to the private sector and asking that companies…
To read the headlines, you could easily be forgiven for thinking that ESG integration in capital markets is now fully underway, as the value of global assets applying environmental, social and governance data to drive investment decisions has soared to $40.5 trillion and now represents more than a third of the $95 trillion equity market in 2020.
