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High Meadows Institute
In 21st century governance challenge

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What the Wells Fargo Crackdown Signals to Corporate America The Federal Reserve’s recently imposed penalties on Wells Fargo diverge from President Trump’s stated position on de-regulation. However, Peter Henning of the New York Times sees the “crackdown” as a one-off penalty and not a sign of broader industry regulation to come.   Unilever Threatens to Reduce Ad Spending on Tech Platforms That Don’t Combat Divisive Content Unilever, long viewed as a leader in corporate social responsibility, recently announced that the company will no longer advertise on platforms that are not “committed to creating a positive impact in society.” The company…

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Chris Pinney
In 21st century governance challenge, Business leadership in society, Future of capital markets

BlackRock’s Larry Fink Redefines the Rules of the Game for Business

For the last 47 years, since September 1970, financial markets have been guided by the maxim articulated by Milton Friedman on the “rules of the game” for business. “There is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” On January 18th this maxim was overturned by the CEO of BlackRock, the world’s largest institutional investor. In his letter to CEOs, Larry Fink said, “Society…

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High Meadows Institute
In 21st century governance challenge

Recommended Reading

BlackRock Message: Contribute to Society or Risk Losing Our Support Larry Fink, the CEO of BlackRock (the largest investor in the world), is sending a letter to the world’s largest public companies letting them know that in addition to turning a profit, they have to show that they are doing good in the world to receive BlackRock’s support–and a share of its $6 trillion AUM. In the letter, Fink shares HMI’s perspective that government is not doing enough to prepare for future and the onus now rests on the private sector to address societal challenges. Wall Street Fighters, Do-Gooders—And Sting—Converge…

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High Meadows Institute
In ESG, Future of capital markets

ESG Integration in Investment Management: Myths and Realities

Until very recently, there has been considerable doubt, especially among mainstream investors, that companies with high ESG “scores” could succeed in producing competitive returns for their shareholders. Studies of the last three decades of the 20th century have reported that what was then known as Socially Responsible Investing (or SRI)—an investment approach that worked mainly by screening out the companies with the lowest ESG scores or entire industries such as tobacco and alcohol—produced shareholder returns that were often below market averages. And this finding has in turn contributed to the widespread perception that corporate efforts to address environmental and social…

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High Meadows Institute
In Bottom line for business, ESG

Finding the Signal in the Noise

The practice of integrating ESG factors into investment decisions is growing, but are asset managers and owners making the right decisions about which factors to focus on? The answer is, not often enough, despite research by George Serafeim and others at Harvard Business School which concluded that company financial performance is only improved if a given ESG factor or issue is relevant, or material, to that company in its industry peer group. As a growing number of asset owners and asset managers are interested in integrating material ESG factors into their investment decisions. Those not yet involved in the practice…

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Chris Pinney
In Business leadership in society

Fighting climate change with active engagement

With a stroke of his pen, President Donald Trump took a major step toward eliminating his predecessor’s landmark climate policy — the Clean Power Plan. Unveiled by President Obama in August 2015, the plan sought to fight global warming by reducing carbon dioxide emissions from power plants. Now, under President Trump, the plan and other environmental policies are in more danger than ever. Some investors might be tempted to approach this new normal by reinvesting in oil and gas. But thus far, the reaction has been more muted. Read more in Pensions&Investments.

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Chris Pinney
In ESG

Widening Our View of ESG Investing

ESG investing strategies—investing plans that align with a healthy environment, social responsibility, and good governance—are some of the fastest-growing strategies in asset management. According to a report from the US SIF Foundation, US institutional assets invested in ESG strategies reached $8.72 trillion in 2016, up 32.7 percent from 2014. ESG’s appeal isn’t limited to larger investors; ESG mutual funds are among the most talked-about consumer investment products on the market. Approximately $81 billion of environmentally friendly “green bonds” were issued last year, according to data from the Climate Bonds Initiative, providing institutional and retail investors a way to engage in ESG investing….

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Chris Pinney
In ESG

Asness and Sorkin Miss the Point When It Comes to ESG

When a leading investment professional like Cliff Asness and a respected journalist like Andrew Ross Sorkin offer their opinions, mainstream investors tend to listen. It’s unfortunate, then, that both these pundits have recently added to the confusion about the impact of ESG on investment returns. More importantly, neither offer any practical insight into how to breakthrough this confusion and how to use ESG as a value driver for both investors and society. In a recent blog post titled “Virtue is its Own Reward: Or, One Man’s Ceiling is Another Man’s Floor,” Asness laid out his argument for why ESG investing…

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Laura Kramer
In ESG, Sustainability

Incorporating ESG Considerations into Engagement Practices

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. The High Meadows Institute recently published a report that explores the different ways investors can engage with companies and provide evidence that shareholder engagement really works — in terms of both profit and ethics. For the purpose of this report, we examined both private and public engagement practices. Private engagement is the route used…

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Laura Kramer
In ESG

Deutsche Bank ESG Investing Conference 2016

Earlier this month, High Meadows Institute President Chris Pinney joined colleagues in the corporate and financial sectors to discuss the complexities of climate risk and environmental, social and governance (ESG) investing. Deutsche Bank held its first annual ESG Investing Conference in Boston on November 1st to address the growing impacts climate change and short-termism have on businesses and investors. Hard hitting topics that were discussed throughout the day included the opportunities ESG integration presents investors in uncertain times, what the transition to a clean energy economy could look like for companies and communities, and what the ESG investment space is…

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