ESG Flashcards
What was an early example in South Africa where investing was driven by other factors than return?
In the 1970s, the worldwide abhorrence of the apartheid regime in South Africa led to one of the most renowned examples of selective disinvestment along ethical lines. As a response to a growing call for sanctions against the regime, the Reverend Leon Sullivan, a board member of General Motors in the United States drew up a Code of Conduct in 1971 for practising business with South Africa.[citation needed] What became known as the Sullivan Principles attracted a great deal of attention and several reports were commissioned by the government, to examine how many US companies were investing in South African companies that were contravening the Sullivan Code. The conclusions of the reports led to a mass disinvestment by the US from many South African companies. The resulting pressure applied to the South African regime by its business community added great weight to the growing impetus for the system of apartheid to be abandoned
What did Friedman argue?
In the 1960s and 1970s, Milton Friedman, in direct response to the prevailing mood of philanthropy argued that social responsibility adversely affects a firm’s financial performance and that regulation and interference from “big government” will always damage the macro economy.[7] His contention that the valuation of a company or asset should be predicated almost exclusively on the pure bottom line (with the costs incurred by social responsibility being deemed non-essential), underwrote the belief prevalent for most of the 20th century.
What theorz did JHames Coeman come up with?
In 1988 James S. Coleman wrote an article in the American Journal of Sociology entitled Social Capital in the Creation of Human Capital, the article challenged the dominance of the concept of ‘self-interest’ in economics and introduced the concept of social capital into the measurement of value.
WEhat did John Elkington come up with in 1998?
In 1998 John Elkington, co-founder of the business consultancy SustainAbility, published Cannibals with Forks: the Triple Bottom Line of 21st Century Business in which he identified the newly emerging cluster of non financial considerations which should be included in the factors determining a company or equity’s value. He coined the phrase the “triple bottom line”, referring to the financial, environmental and social factors included in the new calculation.
What did Friedman say about acting ehtically?
In the early years of the new millennium, the major part of the investment market still accepted the historical assumption that ethically directed investments were by their nature likely to reduce financial return. Philanthropy was not known to be a highly profitable business and Friedman had provided a widely accepted academic basis for the argument that the costs of behaving in an ethically responsible manner would outweigh the benefits.
What did Moskovity conclude?
He argued that improving corporate governance procedures did not damage financial performance, on the contrary it maximised productivity, ensured corporate efficiency and led to the sourcing and utilising of superior management talents
Who argued strongly against Friedman?
Where Friedman had provided the academic support for the argument that the integration of ESG type factors into financial practice would reduce financial performance, numerous reports began to appear in the early years of the century which provided research that supported arguments to the contrary.[15] In 2006 Oxford University’s Michael Barnett and New York University’s Robert Salomon published an influential study which concluded that the two sides of the argument might even be complementary – they propounded a curvilinear relationship between social responsibility and financial performance, both selective investment practices and non-selective could maximise financial performance of an investment portfolio, the only route likely to damage performance was a middle way of selective investment
What is divestment?
Divestment, also known as divestiture, is the opposite of an investment, and it is the process of selling an asset for either financial, social or political goals. Assets that can be divested include a subsidiary, business department, real estate, equipment and other property. Divestment can be part of following either a corporate optimization strategy or political agenda, when investments are reduced and firms withdraw from a particular geographic region or industry due to political or social pressure.
Whasy are divestments usually done?
Divestment involves a company selling its assets to improve its value and obtain higher efficiency. Many companies use divestment to sell off peripheral assets that enable their management teams to regain better focus on the core business. Proceeds from divestment are typically used to pay down debt, make capital expenditures, fund working capital, or pay a special dividend to a company’s shareholders. While most divestment transactions are deliberate efforts, selling assets in some cases could be forced due to regulatory action.
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