The Systemic Interaction Between Corporate Governance and ESG: The Cascade Effect

In THE PALGRAVE HANDBOOK OF ESG AND CORPORATE GOVERNANCE (Paulo Câmara & Filipe Morais eds., Palgrave Macmillan 2022)

Governance Lab Working Paper No.04/2023

30 Pages Posted: 19 Jun 2023

See all articles by Paulo Câmara

Paulo Câmara

Governance Lab; Faculty of Law, Portuguese Catholic University, Lisbon

Date Written: June 9, 2023

Abstract

This chapter intends to structure the analysis, in different angles, on how corporate governance interacts with ESG (environment, social and governance) matters. Corporate governance relevance goes beyond being the “G” pillar of ESG, as one of the three criteria for responsible investment. The corporate governance system serves to prepare, adopt, execute, monitor, and enforce decisions in ESG matters. Therefore, the interaction between corporate governance and ESG is structural, reciprocal and multifaceted. Two main levels are to be taken into account: the investors’ level and the investee companies’ level.

One of the cornerstones of this analysis is the concept of the ESG cascade effect here described as the potential aptitude for companies to engage in ESG-based decisions and to systemically influence others to do so, including investors, investee companies and their respective supply chain and community.

Keywords: ESG, corporate governance, disclosure, remuneration, greenwashing, board duties, board member skills, risk management

Suggested Citation

Câmara, Paulo, The Systemic Interaction Between Corporate Governance and ESG: The Cascade Effect (June 9, 2023). In THE PALGRAVE HANDBOOK OF ESG AND CORPORATE GOVERNANCE (Paulo Câmara & Filipe Morais eds., Palgrave Macmillan 2022), Governance Lab Working Paper No.04/2023, Available at SSRN: https://ssrn.com/abstract=4474337 or http://dx.doi.org/10.2139/ssrn.4474337

Paulo Câmara (Contact Author)

Governance Lab ( email )

Rua Garrett, 64
Lisbon, 1200-204
Portugal

Faculty of Law, Portuguese Catholic University, Lisbon ( email )

Palma de Cima
Lisboa, 1649-023
Portugal

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