The Business Case for ESG

9 Pages Posted: 23 May 2019 Last revised: 2 Jun 2019

See all articles by Brandon Boze

Brandon Boze

ValueAct Capital

Margarita Krivitski

ValueAct Capital

David F. Larcker

Stanford University - Graduate School of Business

Brian Tayan

Stanford University - Graduate School of Business

Eva Zlotnicka

ValueAct Capital

Date Written: May 23, 2019

Abstract

Recently, there has been debate among corporate managers, board of directors, and institutional investors around how best to incorporate ESG (environmental, social, and governance) factors into strategic and investment decision-making processes. In this Closer Look, we examine a framework informed by the experience of ValueAct Capital and include case examples.
We ask:

• What is the investment horizon prevalent among most companies today?
• Do companies miss long-term opportunities because of a focus on short-term costs?
• How many companies have an opportunity to profitably invest in ESG solutions?
• What factors determine whether a company can profitably invest in ESG solutions?
• Can investors earn competitive risk-adjusted returns through ESG investments?
• If so, how widespread is this opportunity?

Keywords: Corporate governance, shareholder, stakeholder, stakeholder perspective, ValueAct, ESG, environment, sustainable investing, corporate social responsibility, corporate sustainability, long-term investing, risk management, boards of directors, risk management, corporate governance research

JEL Classification: G1, G2, G3

Suggested Citation

Boze, Brandon and Krivitski, Margarita and Larcker, David F. and Tayan, Brian and Zlotnicka, Eva, The Business Case for ESG (May 23, 2019). Rock Center for Corporate Governance at Stanford University Closer Look Series: Topics, Issues and Controversies in Corporate Governance No. CGRP-77. Available at SSRN: https://ssrn.com/abstract=3393082

Brandon Boze

ValueAct Capital ( email )

One Letterman Drive
Building D, Fourth Floor
San Francisco, CA 94129
United States

HOME PAGE: http://https://valueact.com/team/

Margarita Krivitski

ValueAct Capital ( email )

One Letterman Drive
Building D, Fourth Floor
San Francisco, CA 94129
United States

HOME PAGE: http://https://valueact.com/team-member/margarita-krivitski/

David F. Larcker (Contact Author)

Stanford University - Graduate School of Business ( email )

Graduate School of Business
518 Memorial Way
Stanford, CA 94305-5015
United States
650-725-6159 (Phone)

Brian Tayan

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Eva Zlotnicka

ValueAct Capital ( email )

One Letterman Drive
Building D, Fourth Floor
San Francisco, CA 94129
United States

HOME PAGE: http://https://valueact.com/team/

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