ESG is now mainstream and holistic Corporate Governance now drives brand value. But exactly what is ESG? We look at its origins in Responsible Investing and the principles thereof, various interpretations of ESG and its evolution towards complete acceptance by the investment community of the effect of holistic corporate governance on sustainability (in the widest sense) and hence brand value.
A recent article by Professor Alfred Rappaport in the Financial Times defended his very influential and widely followed philosophy of the primary importance of the pursuit of shareholder value. This has come under increasing criticism in recent years, as the concept of a more balanced stakeholder approach has gained wider acceptance, and particularly as capitalism itself has come under fire since the 2008 financial collapse. So we thought it would be interesting to go back to the source of the controversy and review Prof. Rappaport’s defining book, Creating Shareholder Value, thirty years after its publication, in the light of current views about corporate governance, and see whether we agreed with Prof. Rappaport’s self-justification.
So-called “Passive” investment funds, which follow the markets rather than invest actively in companies, are growing in number. But are they really “passive” owners? Research suggests otherwise. We look at the data and whether, as stewards, they can and do influence corporate governance and performance in their investee companies.