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

See all articles by Eric R. W. Knight

Eric R. W. Knight

University of Sydney Business School

Adam D. Dixon

Maastricht University

Date Written: November 16, 2009

Abstract

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

Suggested Citation

Knight, Eric R. W. and Dixon, Adam D., The Role of Asset Consulting in Transforming Investment Decision-Making: The Integration of Environmental, Social and Governance Considerations into Corporate Valuation (November 16, 2009). Available at SSRN: https://ssrn.com/abstract=1507133 or http://dx.doi.org/10.2139/ssrn.1507133

Eric R. W. Knight (Contact Author)

University of Sydney Business School ( email )

Cnr. of Codrington and Rose Streets
Sydney, NSW 2006
Australia

Adam D. Dixon

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200MD
Netherlands

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