ESG Research Initiative

ESG and Financial Literacy

The project goal is to facilitate the incorporation of environmental, social and governance (ESG) factors into investment decision-making. We are particularly interested in the Millennial/Generation Z audience. On the supply side, we are developing a database of different ESG-related products that exist and identify how this information currently is made available to potential investors. We will make a preliminary classification of these standards according to the current dimensions, typologies, and characteristics. On the demand side, we are developing a new survey to assess investor’s financial and ESG literacy as well as their motivation for and expectations of investing in ESG products. A pilot survey will be conducted among Millennials/Gen Zers in the U.S. Our analysis will look for gaps between the ‘supply and demand’ of ESG investing information and opportunities to close these same gaps.

Translating SDGs into ESG

For investors, ESG is becoming an ever more important consideration in their investment decisions. Larry Fink, CEO of Blackrock predicts that the demand for ESG will transform investing in the near future and ESG metrics will become the most important component for assessing a company’s value. We will focus on the following two research questions:

1. How well do the current metrics used to measure and message CSR activities translate when compared to the indicators used to assess ESG?
2. How can firms most effectively and efficiently identify, collect, analyze and message information about their activities that is responsive to both CSR and ESG audiences?

G… As in ESG

The "G" in ESG addresses a range of issues of corporate governance such as a company’s leadership, executive pay, audits, internal controls, and shareholder rights. Corporate governance is an important indicator of a firm’s ability to respond to disruptions in a way that mitigates risks and promotes growth. Governance covers a broad range of corporate activities including board and management structures as well as a company's policies, standards, information disclosure, auditing and compliance. And they look for boards that are engaged and diverse.

The topic of ‘good corporate’ has been researched and debated for decades. Board members have fiduciary responsibilities: duties of care, loyalty and good faith and an obligation to maintain confidentially. Given the diverse range of competing ESG standards, do any ESG standards present a potential conflict with board members fiduciary responsibilities? And if conflicts — or even the appearance of conflicts — do appear, how might these issues be resolved?

ESG and Regulations

ESG has evolved as a non-governmental, voluntary corporate compliance form of governance.  But government regulations are still relevant to ESG. Business decisions made in response to ESG compliance must still adhere to government regulations. This research project maps out the intersections of ESG and U.S. government agency regulations and regulatory authority, how the regulations currently affect ESG standards and compliance, and how and agency authorities might affect ESG compliance and standards in the future.