Impact Blog

The views expressed in these posts are those of the authors and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Calvert fund. References to individual companies for Engagement or Research purposes are provided for illustrative purposes only and may not be representative of the results of all of Calvert’s engagement efforts. The discussion herein is general in nature and is provided for informational purposes only. There is no guarantee as to its accuracy or completeness. Past performance is no guarantee of future results.

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      By Calvert Research and Management

      Washington - Companies are increasingly addressing environmental, social and governance (ESG) factors as part of strategic and operating decisions. However, there are limits to how much individual companies can accomplish in achieving progress toward ESG goals. Companies that devote resources to certain ESG factors may be at a short-term competitive disadvantage to competitors that do not. Collaboration within industries on sustainability issues can alleviate that disadvantage.

      "Investment Stewardship for Positive Societal Impact," a new paper produced by Harvard Business School professor George Serafeim in collaboration with Calvert Research and Management, proposes that large investors, including index funds, active managers and pension funds can act as "stewards of the commons" by helping build and sustain industry and more broadly systems-level collaborations for ESG issues.

      The limits of corporate self-interest

      In recent years, the growth of investor interest in sustainable investing has been remarkable. As that interest has grown, the response of corporations has evolved. Corporate strategies have become more sophisticated, integrating ESG factors at the core of the organization to guide both strategic and operating decisions.

      However, there are clearly limits to how far corporate self-interest can go in helping foster positive social change. This paper discusses those constraints and offers a new paradigm: investors as stewards of the commons.

      Investors already routinely engage in constructive advocacy with individual companies for ESG goals, and these efforts often influence entire industries. The paper postulates that with the great concentration of assets in large firms, investors are uniquely situated to extend these "win-win" initiatives, while augmenting the risk/return profile of their portfolios, often for the better. By advocating for collaboration, investors can provide the positive impetus in the many cases where even the best efforts of individual firms are likely to fall short.

      To read the full report, click here

      Bottom line: Large investors have the leverage to be stewards of the commons, ensuring that companies make coordinated efforts to address the world's crucial environmental, social and governance goals. All investors have the ability to help make that happen.