Impact investors hope to achieve positive social change, but can they also offer unique insights into corporate financial performance? The answer to this question may determine whether impact investing remains a niche practice or becomes fully integrated into best practice for all investors.
This course will explore emerging questions regarding corporate social and environmental sustainability from the perspective of the investor in public equities. Does a company’s relationship with society have implications for long-term financial performance? What insights can investors gain about a company’s long-term risks, opportunities, and management quality from examining a company’s social and environmental policies? Do the owners of companies have influence over corporate policy? How do corporations respond to the use of shareholder voice? What are the possibilities and limitations of shareholder influence? Does it matter?
In particular, the course will concentrate on “active ownership,” an impact strategy that has been used effectively for decades but is not well understood by the public or many investors. 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. Many investors now consider these issues to be of material concern for the long-term financial performance of companies and markets.
The class will develop analytical tools to evaluate companies’ long-term strategy and management through the lens of environmental, social and governance (ESG) issues. Students will also learn how investors engage directly with corporate boards and management to address sustainability concerns and improve long-term performance.
This course will be relevant for students who are interested in pursuing careers in sustainability, and also any whose career paths include an interest in the long term performance of corporations. Business consultants and corporate executives may consider sustainability issues an alternative perspective through which to assess and develop corporate strategy. Equity analysts and portfolio managers may use environmental, social and governance factors to evaluate the long-term performance and risk factors of companies.
This course is highly interactive, centered on class discussion, small-group exercises, and outside speakers with current and diverse experience in this field. Our cases are drawn from recent and ongoing business and societal conflicts, offering students relevant insights into the challenges that managers and investors are currently facing.
John Wilson was a Columbia Business School faculty member from 2013 to 2020.