Season 1, Episode 5

Madison Condon on Climate and Corporate Governance

On this episode of Free Range, Mike Livermore speaks with Boston University School of Law professor Madison Condon about the interaction between corporate governance and environmental concerns. Condon has written extensively on how corporations are changing their approach to the environment in the face of climate change issues and the rise of ESG investing, which incorporates Environmental, Social, and Governance considerations into larger investment strategies.

Episode is an appropriate teaching tool for but not limited to the following topics & courses: corporate governance, climate change, ESG

Discussion Questions

  • Poke around the Principles for Responsible Investment (PRI) website (www.unpri.org). What are their primary principles? Are there any implicit assumptions that are being made which you would like to challenge?
  • Investors can demonstrate displeasure with corporate governance by leveraging their shareholder rights (“voice”) or by divesting altogether (“exit”). Which is more effective in curtailing emissions? What factors might influence your answer?
  • The theory of universal ownership posits that highly diversified institutional investors own such a swath of the market that their interests align with the public interest writ large, and that this will influence the behavior of individual corporations in surprising and counter-intuitive ways. Do the interests of investors and the market at the broadest scale truly map onto public interest? What kinds of visions might be excluded from this dynamic?
  • How can regulatory bodies support institutional investors in their ESG agendas without stifling market dynamics?
  • In what ways might the interests of retail investors differ from those of institutional investors regarding ESG, and how might these differences be addressed?
  • To what extent is the ability of investors and corporations alike to prioritize ESG sustained by economic factors, especially the macro-economic situation post-Great Recession? How can ESG stay the course in the event of future market downturns or exogenous shocks?
  • Read the NYT article about Engine No. 1’s successful campaign to gain board seats at Exxon, and then read the FT article from 2 years later on the aftermath. Do these developments influence your opinion on the viability of ESG and activist investing? Why or why not?

Additional Readings