The Role of Asset Consulting in Transforming Investment Decision-Making: The Integration of Environmental, Social and Governance Considerations into Corporate Valuation
37 Pages Posted: 16 Nov 2009 Last revised: 15 Mar 2010
Date Written: November 16, 2009
This paper seeks to examine the role of asset consulting companies in the context of the global financial crisis and systemic shortcomings in investment management industry. This role is considered in light of recent moves within the finance community to integrate environmental, social and governance (ESG) considerations into corporate valuation analysis; a move which has gained momentum following the shortcomings in financial model making elucidated by the global financial crisis.
Using survey data collected by the United Nations Environment Programme Finance Initiative to develop theoretical arguments, this paper portrays the consultant in a conflicted position as both thought-leader with direct access to trustee board decision-making, and as corporate follower where client demands prevail. It is suggested that higher levels of expertise and knowledge strengthen consultants’ ability to take a leadership position in the adviser-client relationship. In cases where consultants have superior expertise, they are able to build more influential relationships with their clients and colleagues, and overcome systemic and cultural barriers to new investment approaches within the investment community.
Keywords: ESG, Corporate Governance, Investment Consulting, Global Financial Crisis, Environment, Finance
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