Tessa Hebb

Why Should They Care? The Role of Institutional Investors in the Market for Corporate Global Responsibility

Institutional investors, primarily pension funds, drive global financial markets. The result is investors vulnerable to the risks companies face in global consumer and capital markets. Though some market risks are inevitable, others, such as reputation risk, can be mitigated through increased corporate social and environmental standards and the increased transparency that such higher standards demand. The transparency necessitated by reputation management has a dual role in monitoring corporate behaviour and providing all stakeholders (internal and external) with the information to evaluate corporate behaviour. Driving this process is the belief that higher standards of corporate responsibility pay off for investors over the long term both through potential equity premia and through risk reduction. This paper presents a model for understanding how and why institutional investors may encourage firms to adopt higher standards. To illustrate our argument, we refer to the experience of the UK Universities Superannuation Scheme (USS) strategy of corporate engagement and the attempts of the USS to encourage firms to raise their environmental standards by focusing on the climate change impacts of pension-fund investments. Investor engagement in corporate responsibility offers an insight into the role of investors in global-standard setting and global citizenship.

Canadian Social Enterprises: An Empirical Exploration of Social Transformation, Financial Self-Sufficiency, and Innovation

This article reports on empirical research investigating social transformation, financial self-sufficiency, and innovation in Canadian social enterprises. A set of profiles on 60 randomly selected social enterprises utilizing information from each organizations Web site was developed and analyzed. The profiles show that about one-third of the sample enterprises were deemed high in social transformation, approximately one-half were assessed high in financial self-sufficiency, and fewer that one-fifth were found to be highly innovative. Implications for marketing in social enterprises are drawn.

Impact investing and responsible investing: what does it mean?

We hear a lot about impact investing these days, but what is it and how does it relate to responsible investing? As we know, responsible investing takes environmental, social and governance factors...

The next generation of responsible investing

Acknowledgements.- About the Contributors.- Chapter 1: Introduction - The Next Generation of Responsible Investing Tessa Hebb.- Chapter 2: After the Credit Crisis - the Future of Sustainable Investing Cary Krosinsky, Nick Robins and Stephen Viederman.- Chapter 3: Putting Sustainable Investing into Practice: A governance framework for pension funds Claire Woods and Roger Urwin.- Chapter 4: Avoiding the Next Financial Crisis Michael Musuraca.- Chapter 5: From Fiduciary Duties to Fiduciary Relationships for Socially Responsible Investment Benjamin J. Richardson.- Chapter 6: Effective Shareholder Engagement: The factors that contribute to shareholder salience James Gifford.- Chapter 7: Measuring the Impact of Engagement in Canada Tessa Hebb, Heather Hachigian, and Rupert Allen.- Chapter 8: The Good Corporate Citizen Ed Waitzer and Johnny Jaswal.- Chapter 9: Misdeeds Matter: Long-Term Stock Price Performance after the Filing of Class-Action Lawsuits Rob Bauer and Robin Braun.- Chapter 10: Targeted Responsible Investing Tom Croft.- Chapter 11: Social investment and responsible investment: Their relationship and intersections in the mining industry Caitlin McElroy.- Reference List.- Index.

Shareholder engagement in the extractive sector

The extractive industry sector has become one of the most prominent areas for shareholder engagement. Given its environmental and social impacts, and global nature, this sectors operations are particularly prone to financially material reputational risks. Large-scale investors and financial analysts concerned with reputational risk as a consequence of insufficient environmental, social and governance (ESG) standards in companies are increasingly turning to shareholder engagement as the preferred and most direct method of implementing, monitoring and advising companies. This article argues that shareholders have some impact on ESG issues with companies in the extractive sector. Their influence stems from the legitimacy they bring to the engagement process, with a high degree of knowledge in the sector and a pragmatic approach that recognizes the incremental pace of change in extractive companies. In this article we build on the work of both Mitchell and others, and Gifford on stakeholder saliency, in order to assess the results of engagement at the level of the firm, with particular reference to the extractive sector. Previous work has focused on the saliency of such engagement at the stakeholder level, with the investor as the unit of analysis. We investigate the impacts and perceptions of shareholder engagement in the extractive sector examining engagements NEI Investments with Canadian mining giant Barrick Gold from 2005 to 2009. We further quantify the results of the engagement using data from a third-party rating agency.

Financing the third sector: Introduction

Abstract Civil society organizations (nonprofits, social enterprises, voluntary, community and charitable organizations) are not only an integral part of the delivery of health, education, social, and other services in most developed countries, but also critical contributors to a healthy democracy and a strong economy. How civil society organizations are financed is a key aspect of their sustainability. Such financing is undergoing significant innovation and transformation. This financing ranges from traditional government funding and philanthropic support to new forms of revenue-generating social enterprises. In this themed issue of Policy & Society we bring together international scholars to critically examine the current changes underway in financing the third sector. The volume identifies and analyzes particularly innovative and effective strategies for financing this sector and assesses the implications for public policy through an intentionally broad range of cases that draw on the experience of a number of different countries in financing the third sector.

Measuring the Impact of Engagement in Canada

Institutional investors are becoming more concerned with the environmental, social and governance (ESG) standards of companies in which they invest. For these investors company-level ESG factors represent future risk when they hold their investments over a long period of time. Given the long-term nature of their portfolios, these investors engage with companies to raise these standards. This chapter argues that corporate engagement has the potential to produce a positive change in company behaviour. It asks: what leads to successful outcomes in engagement? We seek to quantify any observed positive change in corporate ESG standards that result from engagement. The chapter extends the literature on stakeholder engagement. We use three case studies of engagements between institutional investors and companies in Canada over the past 5 years. We examine the outcomes of each engagement from the perspectives of the investor. We also consider the short term impacts and long term changes in corporate behaviour that resulted from engagement.

Can private pension funds be socially responsible? The US experience

For much of the relevant literature, the “Anglo-liberal” model is the least satisfactory approach to the provision of retirement pensions. This article addresses a particular aspect of the Anglo-liberal model, the investment of retirement savings in equities and other interest-bearing assets, to augment retirement benefits. The management of such investment pays insufficient attention to the externalities that may arise from corporate decision-making. Nevertheless, several US pension funds have embraced labour-friendly investment practices, which are vital to the well-being of employees, as well as the maintenance of sustainable and vibrant communities. In this respect, the Anglo-liberal model is not necessarily at variance with the demands of social justice and inclusion.

Investing in Sustainable Infrastructure

Sustainable business is underpinned by sustainable and resilient infrastructure defined as infrastructure that integrates environmental, social and governance (ESG) aspects into a project’s planning, building, and operating while ensuring resilience in the face of climate change or shocks. Currently, trillions of dollars of infrastructure investment are needed to meet our needs globally. Governments, constrained by debt and deficits, do not have the necessary means to meet this global infrastructure gap. Large institutional investors are increasingly filling this void. As they do so, these investors are beginning to take environmental, social, and governance issues into account in their infrastructure portfolios. This chapter explores the shift toward greater consideration of ESG in infrastructure investment. It looks at the drivers of these phenomena and some of its implications. It examines new financial instruments emerging in the sector such as Green Bonds and Community Benefit Public Private Partnerships. But integrating ESG in infrastructure investment is not without its challenges. Given that these large institutional investors have a fiduciary duty to serve their beneficiaries in both the short and long term, incorporating sustainability in infrastructure investment raises tensions between the need for profitable financial returns and the need to contribute to a healthy and sustainable planet. These challenges are explored in greater depth at the close of the chapter.

Seeking Greener Pastures: Exploring the Impact for Investors of ESG Integration in the Infrastructure Asset Class

In recent years the conditions for infrastructure investment, particularly sustainable infrastructure investments, have become especially favorable. Investors are becoming increasingly interested in sustainable infrastructure projects which promote positive social and environmental impact together with long-term, stable financial returns. In the public sector, governments are growing more interested in measuring the broader community objectives which infrastructure projects satisfy. Responsible investment has, over the past few decades, proven to be a fast-growing movement in the field of investment decision-making. Responsible investments tend to be long term in nature and seek to reduce risk and achieve positive financial returns by taking environmental, social, and governance (ESG) factors into account. In the past, such considerations were applied primarily to public equity investments, but increasingly investors are applying this lens to other asset classes. One of the asset classes which is new to ESG scrutiny is infrastructure. This chapter examines the recent shift to infrastructure investment and the ability for high ESG standards over the full life cycle of these assets to contribute to a more sustainable financial system.