Should investors care about the social impact of the companies in their portfolios? Can a company’s relationship with society impact its investment performance? Should investors try to shape corporate behavior or just sell shares if they disagree with management? How do shareholders use their voice to influence corporate policy? How do corporations respond? What are the possibilities and limitations of shareholder influence? Does it matter?
As fractional owners of companies, shareholders possess the right to influence corporate policies on environmental and social concerns. Following a decade of corporate scandal, financial crisis, and increasing concern about climate change and globalization, interest in using these powers is growing beyond the small community of religious and socially conscious investors who have traditionally raised these concerns with corporations.
By 2012, over 900 institutional investors with assets of over $30 trillion had endorsed the United Nations Principles for Responsible Investment (UNPRI). Signatories to the UNPRI pledge to be “active owners,” engaged directly in the governance of the companies in which they invest. In response, nearly 6000 companies worldwide now publicly report on their social responsibility policies and practices.
This course will explore emerging questions regarding corporate social responsibility from the perspective of the investor in public equities. Students will learn how investors engage directly with corporate boards and management to address sustainability concerns and improve long-term performance.
In-class exercises may include:
1. Discussing the relevance of certain public issues from an investor perspective;
2. Debating whether investors should support shareholder proposals;
3. Evaluating CSR reports; and
4. Conducting a mock shareholder/company dialogue and drafting mock shareholder proposals.
Course Objectives: After taking the course, students should be able to understand and assess:
1. Diverse perspectives on the link between sustainability and shareholder value;
2. The environmental, social and governance issues of interest to investors;
3. Shareholder strategies to incorporate sustainability and responsibility into investment strategies;
4. Corporate responses to governance and sustainability concerns; and
5. Challenges to responsible investment and emerging trends in the field.
John Wilson was a Columbia Business School faculty member from 2013 to 2016.