Corporate Identity in Play: The Role of ESG Investing. John Ruggie, 2019, Book Chapter, “On August 19, 2019, the U.S. Business Roundtable (BR), comprising the CEOs of more than 200 of America’s largest corporations, issued a new mission statement on “the purpose of a corporation” (BR, 2019a). The press release noted that each periodic update on principles of corporate governance since 1997 had endorsed the principle of maximizing shareholder value.
In contrast, the new statement commits signatory CEOs “to lead their companies for the benefit of all stakeholders – customers, employees, suppliers, communities and shareholders” (BR, 2019b). “[Milton] Friedman must be turning in his grave,” a Fortune magazine article declared (Murray, 2019). “” Link
Human Capital and the Future of Work: Implications for Investors and ESG integration. George Serafeim, 2019, Paper, “Human capital development (HCD) is a key consideration for most companies, but only recently investors have focused on understanding the risks and opportunities related to human capital with the emergence of environmental, social and governance (ESG) investment frameworks and impact investing. We argue that the importance of human capital is likely to be magnified in an environment of rapid technological change where the future of work is uncertain and that existing frameworks to measure and evaluate human capital development might not be fit for purpose. Against this backdrop, we derive a human capital development metric that focuses on outcomes rather than inputs; show that even in the current disclosure landscape one could measure with reasonable accuracy this human capital development metric for thousands of companies; and provide exploratory evidence on its relationship with employee productivity. Moreover, we develop an estimate of probability of automation of job tasks for each sub-industry and show the relation of this probability to elements of our HCD metric and other human capital characteristics. Finally, we outline an investor engagement framework to improve the disclosure landscape related to HCD and to empower effective investment stewardship.” Link
Harvard Business School Broadcast (Podcast). Jan Rivkin, George Serafeim, William Kerr, June 20, 2019, Audio, “Bloomberg Businessweek Editor Joel Weber talks about Businessweek Best B-Schools rankings. Scott Sperling, Co-President at Thomas Lee Partners, explains why companies are taking longer to go public. Sal Khan, Founder of Khan Academy, talks about launching a partnership with NWEA. John Connaughton, Co-Managing Partner at Bain Capital, discusses opportunities in private equity investing. Jan Rivkin, Senior Associate Dean at Harvard Business School, talks about the HBS MBA program. George Serafeim, Professor of Business Administration at Harvard Business School, shares his thoughts on ESG and impact investing. Kelley Morrell, Head of Tactical Opportunities at Blackstone, talks opportunities beyond traditional private equity. Bill Kerr, Professor of Business Administration at Harvard Business School, discusses managing the future of work. Jonathan Nelson, Founder and CEO at Providence Equity, talks about investing in live events and the value of content. Hosts: Carol Massar and Jason Kelly. Producer: Paul Brennan.” Link
Patient Capital: The Challenges and Promises of Long-Term Investing. Victoria Ivashina, Josh Lerner, 2019, Book, “How to overcome barriers to the long-term investments that are essential for solving the world’s biggest problems. There has never been a greater need for long-term investments to tackle the world’s most difficult problems, such as climate change and decaying infrastructure. And it is increasingly unlikely that the public sector will be willing or able to fill this gap. If these critical needs are to be met, the major pools of long-term, patient capital—including pensions, sovereign wealth funds, university endowments, and wealthy individuals and families—will have to play a large role. In this accessible and authoritative account of long-term capital investment, two leading experts on the subject, Harvard Business School professors Victoria Ivashina and Josh Lerner, highlight the significant hurdles facing long-term investors and propose concrete ways to overcome these difficulties.” Link
Does Sustainable Investing Lead to Lower Returns? George Serafeim, January 25, 2018, Paper, “Taking into account the work that the Sustainability Accounting Standards Board has done in identifying material ESG issues, industry by industry, in another study we analyzed more than 2,000 stocks over 22 years and showed that firms improving their performance on material ESG issues, such as on environmental impact in the power sector, workplace safety in the mining sector, and employee inclusiveness in the information-technology sector, have significantly higher future risk-adjusted returns. A negative screening in the oil-and-gas sector would exclude all companies, while an ESG integration approach would take into account how different firms are investing in renewable-energy generation and electric charging stations, dimensions on which Shell and Exxon Mobil, for instance, look very different. […]we documented that development of ESG funds is driven by marketing goals as opposed to investment logic.” Link
Corporate and Integrated Reporting: A Functional Perspective. Robert Eccles, George Serafeim, May 5, 2014, Paper. “In this paper, we present the two primary functions of corporate reporting (information and transformation) and why currently isolated financial and sustainability reporting are not likely to perform effectively those functions. We describe the concept of integrated reporting and why integrated reporting could be a superior mechanism to perform these functions. Moreover, we discuss, through a series of case studies, what constitutes an effective integrated report…” Link