George Dallas : "Corporate Governance, Corporate Responsibility and Sustainability"

SDR 2006-2007

Corporate Governance, Corporate Responsibility and Sustainability

« At Standard & Poor’s our primary focus is providing independent risk analysis, investment research and data to the financial markets. The investment community is a core user of our services, and largely consists of creditors, shareholders and insurers. We recognize that corporate governance and corporate responsibility issues can have a key role to play in company analysis from both a credit and an equity perspective.
During the past year, corporate social and environmental performance has become increasingly visible to the global investment community, given media attention, civil society advocacy, shifting consumer sentiments, and corporate issuers themselves enhancing their reporting and communication in this area. This domain has long been a purview of socially focused investment funds – a small, but growing, segment of the investment world. Recent developments and initiatives are also raising the profile of ESG issues in the world of more «mainstream» investors that do not operate with a specific social mandate in their investment guidelines.
For mainstream investors, which can include both shareholders and creditors, ESG-related factors often are not taken explicitly into account in the investment process. However, these issues can be analyzed as potentially material influencers or indicators of a company’s operational and financial performance.
At present, there still is relatively limited empirical evidence with regard to the financial impact of sustainability issues more generally for investors. But as reporting standards and corporate disclosure in this area continue to improve, more light will be shed on the economic relevance of environmental and social performance as an investment criterion. Indeed, strong ESG performance increasingly is identified as a proxy for good general management – a consideration of relevance to all investors. »