PHL295H1 Lecture Notes - Lecture 11: Quality Management, Activist Shareholder, Socially Responsible Investing
Document Summary
General idea: investors should use financial power to influence positively the economy. How to tell if an investment is good or not. 4) what are the ethical problems raised by responsible investing? (limits) No: there is a huge risk for negative externalities. Esg criteria: environmental, social, governance: environmental: renewable energies, pollution, climate change, recycling, social: human rights, diversity, safety, social development, governance: pay ratio, board composition (male vs female), transparency, corruption. Industries that create social / environmental value: 3) relative selection (best-in-class): aims at selecting firms that are the leaders of their sector. 2) instrumental to business ethics: responsible investing is a very powerful instrument to promote business ethics (firms do have ethical obligations: sri push for more ethical practices in market. Higher quality management, better reputation w/ customers, lower environmental costs, adaptation to regulation etc: shareholders trust = shareholders stick together, general point: csr tracks unrecognized risks. 4 ethical problems raised by responsible investing.
