Steady On: Toward Principled, Sustainable Corporate Leadership Addressing the Reality of Human-Caused Climate Change

Abstract

This lecture addresses lessons for corporate leaders arising out of the recent controversy about so-called “ESG” and about corporate consideration of social and political issues. The lecture encourages corporate leaders to not to repeat past mistakes by over-reacting to the current moment, and instead to learn from this moment, and develop corporate policies and deliberative strategies that are more sustainable, because they relate those strategies more closely to the company’s specific business, and the impact that a social issue, and climate change in particular, has on the company’s stockholders, workers, consumers, and communities of operation. In particular, if corporate leaders focus on showing how addressing an issue is critical to the corporation’s ability to make money the right way, and thus to its sustainable profitability, they are most likely to develop sensible policies and to be able to explain them to their stakeholders — and in particular to the investors who elect directors.

Keywords: Climate change, corporate governance, ESG, corporate responsibility, institutional investors, stakeholders, boards of directors, fiduciary duties

JEL Classification: G32, G38, G39, K22, L21, M14, Q54, Q58