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Governance is Key to the Value of ESG

| Oct 05, 2021 |

Now more than ever, investment firms expect companies to “hold their feet to the fire” and disclose their environmental, social, and governance (ESG) policies. The opportunities and risks of corporate sustainability practices for value investors was the topic of a Sept. 27 Gabelli School Virtual Centennial Speaker Series webinar sponsored by the Gabelli Center for Global Security Analysis, the CFA Society New York, and the Museum of American Finance.

In this session, Gunjan Banati, chief risk officer and managing director at Royce Investment Partners, and Dianne McKeever, JD, LAW ’15, chief investment officer and co-founder of Ides Capital Management LP, discussed ESG trends, disclosure, and governance.

In Banati’s experience, if a company has a lack of diversity on their board, weak management, and poor shareholder rights, it is less likely that they would consider the other aspects of their ESG data. “We think governance has to be the starting point,” she said. “It sets the framework for accountability and decision-making, as well as setting the tone for corporate culture. We don’t think you can have a lot of the ‘E’ and ‘S’ if you don’t have the foundations of governance.”

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