Center for ESG Research is interviewed by AM Watch to explore explanations for the retail investors use of the Morningstar ESG rating system – and potential use of a new low-carbon ratings. See here. (You need a subscription – but can sign up for 14 days free of charge)
Corporate governance theories generally suggest that institutional investors could effectively improve the quality of governance through intervention and threat to exit. However, passive institutional investors such as index funds and ETFs lack the ability to exit and may not have strong motivation to intervene, thus lowering the quality of governance of the firms they heavily [...]
While traditional socially responsible investors use Environment, Social, and Governance (ESG) performance metrics to exclude “bad actor” companies from their portfolios, the new interest comes from those who hope to match or beat market performance benchmarks. The prevailing wisdom suggests, however, that corporate sustainability leadership only rarely translates into marketplace success and recent studies to [...]
Non-financial information (NFI) provides a clearer picture of a company’s financial performance than only financial information. NFI is increasingly important for investors and other stakeholders, who ask for assurance on NFI as they want to know whether they can trust the reported information. Due to different levels of maturity in NFI reporting, professional accountants approach [...]
The TCFD Knowledge Hub has been launched - and can be found here. The Hub works as a database of useful and inspiring guidelines, examples, and legislations from around the world, whereby companies can find the resources they need to understand and implement the TCFD recommendations. The Hub is divided in 4 sections: Governance, Strategy, [...]
Do institutional investors engage with companies on corporate externalities such as greenhouse gas emissions? And if so, why? We study voting at shareholder meetings by two emblematic global investors: BlackRock, a major asset manager, and the Norway Fund, a responsible sovereign wealth fund. Our data cover 2014 and include the two institutions’ votes on 35,382 [...]
Boards sometimes cut a CEO’s pay following poor performance. This study examines whether such CEO paycuts really work. We identify 1,496 instances of large CEO paycuts during the period 1994-2013. We then create a propensity-score-matched control group of firms that did not cut their CEOs’ pay and employ a difference-in-differences approach to examine the consequences [...]
We examine the effect of unfavorable PCAOB inspection reports, which contain audit deficiencies related to GAAS and/or GAAP violations, on shareholder voting for the auditor ratification. We further investigate whether shareholders likely vote against ratification for the auditors receiving deficiency reports in a weak corporate governance environment. Overall, we do not find evidence that shareholders [...]
The European Commission established the EU High-Level Group on Sustainable Finance (HLEG) to help develop an overarching and comprehensive EU roadmap on sustainable finance. It requested advice on how to ‘steer the flow of capital towards sustainable investments; identify steps that financial institutions and supervisors should take to protect the financial system from sustainability risks; [...]
“The SDGs present an opportunity for business-led solutions and technologies to be developed and implemented to address the world’s biggest sustainable development challenges,” As noted in the SDG Compass. But if neither the corporate nor its capital providers can accurately and easily interpret information from Environmental, Social, and Governance (ESG) reporting, is ESG reporting really [...]
