Dear Fellow Supporters of Integrated Reporting,
The topics in this e-mail are Corporate Purpose, Corporate Forms, Corporate Statesmanship, Legal Actions, Fiduciary Duty and Long-Termism, ESG Integration, Stock Exchanges, and SASB’s Health Care Standards.

Corporate Purpose

Corporate Purpose and Financial Performance” is a new paper by George Serafeim, and his coauthors, on this one Caroline Madras Gartenberg and Andrea Prat. Here is the abstract:
"We construct a measure of corporate purpose within a sample of US companies based on approximately 500,000 survey responses of worker perceptions about their employers. We find that this measure of purpose is not related to financial performance. However, high purpose firms come in two forms: firms that are characterized by high camaraderie between workers and firms that are characterized by high clarity from management. We document that firms exhibiting both high purpose and clarity have systematically higher future accounting and stock market performance, even after controlling for current performance, and that this relation is driven by the perceptions of middle management and professional staff rather than senior executives, hourly or commissioned workers. Taken together, these results suggest that firms with employees that maintain strong beliefs in the meaning of their work experience better performance."
Corporate Forms
“To ‘B’ or Not to ‘B’: The Power of Corporate Form ” by Susan Mac Cormac (published in The Cornerstone Journal of Finance and Banking, September 2016, Volume III, Issue 6) explores the role of corporate forms (e.g., different types of legal entities for incorporation) in addressing important environmental and social issues. She analyzes “B Corps” (which she notes are a certification and not a legal structure), the Low-Profit Limited Liability Company (L3C0, and Social Purpose and Public Benefit Corporations (SPCs and PBCs). Towards the conclusion of the article Suz knows that “We need the new corporate forms (and particularly agreement and promotion of one preferred form) so that we can require the major institutional corporations to identify and actively pursue social and environmental goals instead of merely considering material non-financial factors.”

Corporate Statesmanship
In “EXECUTIVE PERSPECTIVE: From Corporate Citizenship to Corporate Statesmanship” published on October 2, 2016 on the Thomson Reuters Sustainability website, Georg Kell and Martin Reeves start by noting that “Low growth and high uncertainty across the globe make the current environment for global businesses far from ideal. More critically however, the political will and public support for open markets is waning. Nationalism and skepticism towards free markets are both on the rise.[1] They undermine globalization, a major driver of wealth creation in the post-war era. At the same time, they also threaten to jeopardize another key driver – technology – the advancement of which is becoming increasingly colored by people’s fears of social dislocation.” In light of this, they argue that “global businesses now need to adopt a bolder, more activist approach to address the challenges to continued prosperity. They need to embrace corporate statesmanship, which emphasizes collective leadership and not just responsible individual participation. Our societies need the voices and efforts of corporate leaders around the world to deal with inequality and technological dislocation, and to create a new vision for the future.”

Legal Actions

ClientEarth, an NGO of “activist lawyers committed to securing a healthy planet, has alerted the UK’s Financial Reporting Council (FRC) about reporting breaches by two oil and gas companies that have failed to adequately disclose climate change risks. ClientEarth submits that SOCO International Plc and Cairn Energy PLC have failed to inform the market about material economic transition risks, and physical risks, relevant to the companies’ strategies and business models – in breach of the Companies Act 2006.
It is now in the hands of the regulator. The FRC can issue a Committee reference, Press Notice or apply for a court order compelling the company to re-issue the annual report (and the costs of this can be recoverable from the directors personally). The letters of complaint can be found here for SOCO International PLC and here for Cairns Energy PLC.
Fiduciary Duty and Long-Termism
 “Corporate Governance for a Changing World” by Jeroen Veldman., Filip Gregor, and Paige Morrow is a report by the “Purpose of the Corporation Project” being led by Frank Bold and the Cass Business School. It is based on a series of roundtables in Breukelen, Brussels, London, New York, Oslo, Paris and Zurich that “brought together more than 260 leaders in business management, investment, regulation and academic and civil society communities with the aim of identifying desired outcomes and principles of corporate governance fit for the challenges of the 21st century.” It notes that “The roundtables confirmed that corporate law across all jurisdictions offers considerable scope in terms of the purpose of a corporation. The fiduciary duties of directions are typically not owed to the shareholders but rather toward the corporation itself, whereas the interests of shareholders are satisfied as a by-product of the success of the corporation.”
Getting boards on board with sustainability” by Veena Ramani of was published on September 7, 2016 in GreenBiz. She notes that “Despite growing evidence that environmental and social issues affect corporate bottom lines, Ceres research has shown that corporate directors at most major U.S. companies are not engaging on these issues in ways that are effective and meaningful. While many of these companies have sustainability programs, only a few companies consider these issues to be "board relevant." She discusses five ways in which sustainability officers can do a better job of elevating relevant ESG issues to their company’s board.
“Investor Obligations and Duties in 6 Asian Markets” is a report by the UNEP Finance Initiative, PRI and the Generation Foundation.  It is based on reviews of regulations and some 50 interviews. The report begins by noting that “In China, Hong Kong, India, Malaysia, Singapore and South Korea there are compelling national interest reasons for policy makers to promote the incorporation of environmental, social and governance factors into investment practice. Issues include addressing air quality, improving citizens’ long-term health, reducing inequality, providing for an ageing population and attracting the international capital necessary to meet economic growth targets.” It also notes that “The integration of ESG factors in these markets is at an early stage. The global importance of Asia’s markets means the pace of change matters to investors the world over.”

Shifting the Dialogue to the Long Term,” by Tim Youmans and me is a short piece published in Amanda White’s that announces the launch of CECP’s “Strategic Investor Initiative.
ESG Integration

“A Practical Guide to ESG integration for Equity Investing” is a PRI publication in collaboration with the UNEP Finance Initiative and the UN Global Compact. Is a  "guide, investors – both asset owners and investment managers – who are implementing ESG integration techniques in their investment decisions and processes, this report is the most comprehensive description to date of what ESG-integrated analysis is, and how it works in practice.” It explores a variety of integration techniques for fundamental strategies, quantitative strategies, smart beta strategies, passive and enhanced passive strategies, sell-side research, and assessing external managers.

ESG Investing: It still makes you feel good, it still makes you money”  by Hermes Investment Management makes the following key points:

  • Companies with strong corporate governance have been shown to outperform those with poor governance practices
  • We believe that engagement is more effective than divestment for both society and investors
  • The quality of governance affects financial performance in every developed region
  • We incorporate ESG considerations into all of our strategies, not just those labelled ESG
In a study based on its own investment practices, it finds that “While there is no penalty for pursuing sustainable, responsible business practices, our research suggests that exposure to stocks with high ESG risk does detract from performance. Our 2014 report unearthed a strong correlation between corporate responsibility and shareholder returns, finding that companies with poor governance practices consistently underperformed their peers by up to 30bps each month.”
Stock Exchanges
In “Stock exchanges—a force to support sustainable development?” published in Eco-Business on September 15, 2016, Georg Kell notes that “Stock exchanges are not usually associated with social or environmental causes.” But thanks to the UN Sustainable Stock Exchanges (SSE) initiative which “today includes 60 exchanges representing 70 per cent of all listed equities,” “It is clear therefore that exchanges are becoming a major force in the emerging infrastructure on ESG data which investors increasingly demand for in order to assess risks and opportunities over and above traditional financial information.”
SASB’s Health Care Sector
In March of 2016 the Sustainability Accounting Standards Board (SASB) finished its process for setting provisional standards for all 79 industries in 10 sectors. It is now going through a period of deep consultation before these standards are codified. Towards that end, it has assigned an analyst for each sector and seeking comments. SASB is now seeking comments for the Health Care sector, whose analyst is Eric Kane (

Kind regards,


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Saïd Business School · Park End Street · Oxford, Greater London OX1 1HP · United Kingdom