A Community Celebration of “ESG”

There is increasing evidence that business strategy and operations that integrate environmental, social, and governance (ESG) issues can lead to enhanced operational efficiencies and lower costs, greater competitiveness and higher revenues, and improved returns and long-run profits. The concept and definition of “impact” and “values” investing have gained momentum as financial, labor, and product markets have redefined what is important to decisions: Transparency ... Legitimacy ... Resiliency ... Materiality.

The Corporation’s role was reconceptualized in 2004 when then-UN Secretary General Kofi Annan invited over 50 CEOs of major financial institutions to find ways to integrate ESG into capital markets under the auspices of the UN Global Compact. Following that initiative, “Who Cares Wins, 2004-2008” argued that embedding ESG factors in capital markets makes good business sense and results in better societal outcomes while the UN Environmental Program’s Finance Initiative claimed that ESG issues are relevant for financial valuation. These two reports formed the backbone for the Principles for Responsible Investment (PRI) at the New York Stock Exchange in 2006 and the launch of the Sustainable Stock Exchange Initiative (SSEI) the following year. Nearly a decade later, the United Nations General Assembly developed its 17 interlinked Sustainable Development Goals (SDGs or Global Goals) that are intended to be achieved by the year 2030 (colloquially known as “Agenda 2030”). This gained momentum when BlackRock CEO Larry Fink’s 2019 letter to Corporate CEOs stated that “profits and purpose are inextricably linked.” Later that same year, top U.S. corporate executives from 200 companies abandoned the primacy of profits and shareholder interests, claiming: “While each of our individual companies serves its own corporate purpose, we share a fundamental commitment to all of our stakeholders.” Even the late Jack Welch, who had championed shareholder primacy during his tenure as GE’s CEO, renounced it as “the world’s dumbest idea” because a company must also value its stakeholders and strive for long-term growth.

Investors pick stocks and funds they expect will outperform the market. In his bestselling book, Malcolm Gladwell defines a tipping point as “that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire.” ESG fits this characterization with a mega-trend exploding as pension funds, private equity firms, and hedge funds spend trillions of dollars on indexes, investment instruments, and countless research teams offering new products and advice. While ESG may be just one paradigm recognizing companies that have an impact, it has received a lot of attention as available metrics have increased. However, much remains to be learned about ESG metrics and corporate financial performance.

The bigger picture about ESG. Where are for profit and nonprofit corporations headed? What are the bigger challenges? What role do small and medium enterprises play in the future of ESG?

Dr. George Serafeim, Charles M. Williams Professor of Business Administration, Harvard Business School

Author of Purpose + Profit: How Businesses Can Lift Up the World

Co-leader of the Impact-Weighted Accounts Project and the Climate and Sustainability Impact AI Lab, Harvard University. One of the ten more popular authors out of over 12,000 business authors on the SSRN.

ESG and the Capital Region. An interactive conversation with the mayors of Albany, Schenectady, Saratoga Springs, and Troy on the future of ESG climate, opportunities for businesses, and our collective responsibilities.

Congressman Paul Tonko represents New York’s 20th Congressional District, including the communities of Albany, Schenectady, Troy, Saratoga Springs, and Amsterdam.

Congressman Tonko represents all of Albany and Schenectady Counties and parts of Montgomery, Rensselaer, and Saratoga Counties. He is serving his sixth term, after first being sworn into Congress in 2009. He serves on the Energy and Commerce Committee, where he is the Chair of the Subcommittee on Environment and Climate Change.

Dr. Havidán Rodríguez, President of the University at Albany

The High Peaks Impact Award is awarded each year by the UAlbany School of Business to recognize outstanding ESG practices in the capital region. The recognizes an organization based in the New York Capital District that excels in environmental sustainability, social responsibility representing inclusivity and diversity, and transparent, accountable, and responsible governance.

What counts as environmental and social responsibility?

Environmental responsibility includes actions small or large, but ones that are formalized with the intent of owning responsibility or introducing corrections for or minimizing detrimental impact on the natural world.

Social responsibility includes a demonstrated commitment to act as an inclusive member of the community at large and foster inclusivity and diversity within the organization.

What counts as responsible governance?

Responsible governance includes practices that explicitly uphold and consistently demonstrate respect for transparency, responsibility, and accountability across the organization.