Here is the Transition From the Long-Dominant Worldview of “Stockholder Capitalism” in a Changed World
As readers of Highlights know, the shift from “stockholder” to “stakeholder” capitalism has been underway in earnest for a good while now and the public dialogue about this “21st Century Sign of Progress” has been quite lively. What helped to really frame the issue in 2019 were two developments:
There are lively discussions going on, centered on improving publicly-traded company disclosure and reporting – and especially ESG reporting…that is, storytelling about the company’s “non-financials” (in accounting-speak).
The proliferation of ESG / sustainability reporting frameworks, standards, information platforms, industry guidance, stock exchange guidance and much more has been astounding in recent years.
This has been a strange summer in the northern climes, as the corporate sector and capital markets players meet the challenges of the corona virus, economic downturn, and civil protests.
In times of crises (and we have at least three major crisis situations occurring all at once to deal with this summer) certain actions may take a back seat. Not so with forward movement of corporate sustainability and ESG/sustainable investing in summer 2020.
The roots of today’s “sustainable investing” approaches go back decades; the organizing principle often was often around what investors viewed as “socially responsible”, “ethical”, “faith-based” and “values” investing. “SRI” over time evolved into the more dominant sustainable or ESG investing in the 21st Century -- with many more mainstream investors today embracing the approach.
According to responses to a June on-line survey of 2,000 adults in the U.S.A. for “clean manufacturing” leader Genomatica, sustainability is now a top-of-mind issue, with an overwhelming majority (85% of respondents) of Americans indicating they’ve been thinking about sustainability the same amount or more…and 56% want brands and government to prioritize sustainability even in the midst of the crises (Coronavirus, economic downturn – plus civil unrest).
Several encouraging developments for you from the (1) capital markets community and (2) the corporate sector and (3) the combining of forces of each.To start: Morgan Stanley has become the first major U.S. bank to join the Partnership for Carbon Accounting Financials and will begin measuring and disclosing the emissions generated by the businesses that it lends to and invests in.
The popular corporate equity “baskets” including: the Dow Jones Industrial Index, Nasdaq 100, S&P 500, the Russell 1,000 - 2,000 - and 3,000– in essence consists of the underlying value of the corporate shares. Today, there is an ocean of stock indexes for asset managers to license from the creators and then apply process and approaches for keeping track of the companies in the fiduciary portfolio, or to analyze and pick from the underlying issues for their portfolio.
Two heavyweights in the corporate reporting frameworks/standards arena have announced intentions to move closer to help promote “clarity and comparability in the sustainability landscape” – GRI and SASB.
The two organizations just announced a collaborative work plan to demonstrate how some companies have used both sets of corporate ESG reporting standards…together -- and lessons to share for reporters.
For almost a decade in this newsletter we’ve brought to you a steady stream of news, research and experts’ perspectives that focus on two related subject areas: (1) the escalating interest in the investment community in corporate ESG factors and adoption of sustainable investing approaches and (2) the corporate response, clearly in recognition of the intensifying competition for capital and so exerting efforts to excel in ESG strategy-setting, operational performance and disclosure.