On March 3, 2020, Fordham Law School’s Corporate Law Center organized a panel of distinguished experts to discuss legal issues around environmental, social, and governance (ESG) investing. ESG investing involves researching and factoring in environmental, social, and governance issues when examining and evaluating stocks, in addition to considering traditional financial issues. The event was the second in the Center’s new series, “The Corporation in American Society.”
“We’re excited for our community to learn more about what ESG investing is, and the legal considerations it creates for both investors and corporations,” said Abigail Marcus, one of the Center’s directors. “We also wanted to draw into the discussion voices from our community that may not frequently engage in issues of finance and corporate law, but for whom environmental and social issues are their forte.”
The discussion, moderated by Fordham’s Professor Sean Griffith, covered complex topics like decision-making factors in ESG investments, as well as pension fund trust assessments and fiduciary duties when analyzing ESG data.
Jeff Cohen, an institutional product strategist and the head of Private Investments Initiatives at Sustainability Accounting Standards Board, argued how imperative it is for fund managers to factor ESG considerations into their decision-making processes. “If they don’t do it, that would be a breach of fiduciary duty because, in many cases, ESG factors have been found to be financially material,” Cohen continued. “Typically 80 to 90 percent of metastudies show a neutral to positive connection between performance on ESG factors and corporate financial performance.”
Alexandra Wiener, who works on ESG integration, thematic/impact investing, and stewardship efforts for Goldman Sachs Asset Management’s Fundamental Equity business, explained that her team spends a copious amount of time looking at executive compensation and governance. “We think that, if management is incentivized in the right way and there’s the right oversight, [then]that’s the starting point for strong ESG practices.”
The panelists also collectively elaborated on problems with collected and published ESG investing data—including inconsistency, incomparability, and lack of disclosure by companies. “Having more clear, usable, and reliable recorded data would be a tremendous start to making ESG a more appropriate kind of vehicle for lots of different factors,” added Brooklyn Law School Professor Dana Brakman Reiser.