SUMA K4185: APPLIED ECONOMICS: INVESTOR ROLES IN CORPORATE

SUSTAINABILITY MANAGEMENT Instructor: Ariane van Buren, PhD Course overview:

Leveraging and fostering corporations’ commitment to a more sustainable path of business are among

the most powerful tools for addressing complex environmental and social problems in a corporate-

dominated economy. This course is fundamental for students interested in sustainability management by

the corporate sector and in understanding the role of investors in this. The class will provide sustainability

managers with the necessary tools, exposure to major players, and experience with legal, financial, and

economic data, writings and practical application. Investors are motivating corporations to internalize the

economic externalities from their operations and are at the forefront of identifying investment risks such

as climate change. Investors’ engagement can become thus a two-way channel, giving to access

corporations and, conversely, permitting companies to anticipate and respond to ESG (environmental,

social, and governance) sustainability issues. The course examines the evolution, rationale and mechanics

of investors engaging with corporations, current areas for engagement, evaluation of effectiveness, and

usage across a range of asset classes - in public and private equity, fixed income, selective investment and

social ventures. By the end of the course, students will be equipped to assess the impact of investors on

corporations’ handling of sustainability issues, from both investor and corporate vantage points. They will

be in a position to work on sustainability issues for corporations, corporate lenders, regulators, stock

exchanges, pension funds and endowments, as well as non-profit organizations, which address

corporations.

Dr. Ariane van Buren led the field of shareowner engagement in environmental sustainability from its

inception in the U.S. in 1990. As Senior Advisor to the UN Principles for Responsible Investment, she has

consulted with institutional investors internationally. She was Director of Investor Engagement at Ceres,

where she worked to build the Investor Network on Climate Risk by recruiting trustees of the largest U.S.

public and labor pension funds, meeting at UN Summits representing assets over $22 trillion. She has

held positions as Director of Energy and Environment at the Interfaith Center on Corporate Responsibility,

UN Centre on Transnational Corporations, World Bank, International Institute of Environment and

Development in the UK, and directed the Transnational Institute in the Netherlands. Her doctorate is in

development economics and political economy applied to national energy planning.

Course Objectives

This course considers the economic costs and benefits of investors influencing the sustainability

management of corporations and thus satisfies the SUMA Program’s economics requirement. It both

reflects the financial costs and benefits of sustainability practice and also furthers students’

understanding of what sustainability means from an economic perspective, both in the traditional and

broader socioeconomic sense. In addition, it examines the range of financial, economic, and non-

monetary rationales for investor interest in corporate sustainability management

The course also satisfies SUMA’s financial management requirement. By the end of the course, students

should be able to:

Assess the impact of investors and investor organizations on corporations’ handling of sustainability

issues, and understand how to monitor and manage those issues to reduce a corporation's resource

usage and impact. The course will encourage viewpoint from both investor and corporate

perspectives.

Demonstrate a working knowledge of the processes through which sustainability rules, regulations,

and practices in investor-corporate interaction are created by government and implemented by

investor organizations or corporate departments that deal with investors and sustainability or

environmental affairs.

Apply their understanding of basic principles and theories of sustainability management as a frame for

strategic planning and the management of people, finances and operations toward the sustainability

goals of investor-corporate interaction.

Work collaboratively to develop strategies promoting wide-ranging sustainable solutions and to

effectively communicate these plans in a professional environment.

Successful students will then be in a position to work on sustainability issues for any of the institutions

that play a part in the investor-corporate continuum - corporations, corporate lenders, regulators, stock

exchanges, institutional investors (ranging from public or labor pension funds to university endowments

or foundations), as well as non-profit organizations which address corporations. Students should be able

to articulate how investors influence corporate sustainability management in each asset class. They

should be able to evaluate the effectiveness of shareholder engagement from both investor and

corporate standpoints. Prior exposure to investor interaction with corporations, finance or asset

management is not prerequisite. Fundamentals will be covered during the course.

Textbooks and Reading

No textbook yet covers the ways in which investors influence sustainability issues faced by corporations,

or their constant evolution. Readings are therefore drawn from key articles, reports, websites and key

conferences where investors and corporations meet. They will either be available on the Internet and/or

posted on Courseworks, or they will be distributed in class. Practical examples of investor and corporate

treatment of sustainability issues will be illuminated by experts in the range of fields. Readings assigned

are to be read prior to each class, as it will be taken for granted that students have that general

understanding.

Resources and Software

All readings will be listed on Courseworks. Any readings whose text is not available through Courseworks

will be placed on reserve at the Business School Library. A basic knowledge of Word, PowerPoint and

Excel will be expected for this course.

Course Requirements and Method of Evaluation

Regular attendance in lectures is required. Students will be expected to have done the readings for each

lecture as specified for each week in the Schedule. Attendance in the tutorial session is optional, but

strongly recommended.

Attendance and participation will account for 25 % of the final grade. For participation, students will be

required to:

1. Contribute to class discussions. Contributing to class discussions means enhancing the quality of

the class experience for yourself and others. It involves making relevant, useful and non-obvious

comments, or posing pertinent questions, in clear and succinct language

2. Be prepared to give concrete answers to impromptu questions on readings for any class. The

extent to which students’ observations indicate that they have read the material will factored into

their grade.

3. Prior to each week, several students will be asked to post on the Discussion Board their

assessment of which readings are the most significant that week and why.

4. Team role-play of dialogue between investors and corporations.

The attendance and participation grade will based on attendance and on a weighted index of numeric

grades for each of the four tasks above.

A midterm exam will account for 25% of the final grade. The midterm will consist of 30 multiple choice,

true/false and fill-in-the-blank questions, and one essay question, discussing how investors influence

corporate sustainability management in a particular asset class. The exam will be evaluated on a scale

from 1 to 100. The exam will be open book and open notes. The majority of the points on the exam will be

given for correct methods and analysis; correct numbers will only count for a small portion of the points.

Two papers together will account for 50% of the final grade. See Course Schedule for assignment and due

date for these papers.

The first paper (15% of grade), 500 words maximum, will be to write a shareholder resolution on a

choice of possible issues. Students will work in pairs, one as the sustainability expert, and one as the

investor. They will choose from a provided list of companies and topics.

The second paper (25% of grade), 5 pp, will evaluate the effectiveness of shareholder engagement in a

real-world case. Students will be paired, one writing from an investor and one from a corporate

standpoint. After these papers are submitted, students will prepare a PowerPoint presentation (10% of

grade), based on their papers.

Best student papers will be selected, to be presented by those students, using PowerPoint, to a panel of

experts from institutions that play a part in the investor-corporate continuum - corporations, corporate

lenders, regulators, stock exchanges, institutional investors from pension funds to endowments, or non-

profit organizations that address corporations. This session and the presentations may be recorded as a

webinar.

The final course grade will be compiled from the factors above, using a weighted index of numeric grades

that combine the grades for papers, powerpoints, midterm exam, attendance and participation.

Course Schedule and Assigned Readings

This course meets 2 hours each week for 14 weeks, with a mid-term exam.

Week 1. Topic: Introduction to Investor Roles in Corporate Sustainability Management

Introductions

Overview of objectives and course

Criteria for required reading, skimming, and optional or further reading.

Lecture:

Definition of “sustainability”. Integration of economic, environmental, social and governance (ESG) issues into all business decision-making processes

Internalizing externalities of corporate operations

Significance of institutional investors as long-term investors in corporate sustainability management in U.S. and internationally

History and evolution of investors engaging with corporations

Different investor paths for social and environmental issues v. corporate governance issues

Why and how institutional investors interact with corporations, corporate lenders, regulators, stock

exchanges, pension funds, endowments, and non-profit organizations addressing corporate behavior:

financial materiality or concern over corporate policy as drivers.

Institutional investors taking the lead in corporate governance, and in redefining climate change as an

investment risk

2-way channel, allowing investors to access corporations and companies to respond to ESG issues

Key Referential Context for these fields:

Periodicals Websites

Conferences Definitions and Terms: corporate governance, asset class, public equity, private equity, fixed income,

corporate bonds, commercial paper, infrastructure, real estate, materiality, investment risk.

Suggested Reading prior to the first class meeting: ~65pp. These readings will give prospective students a view of the course and the importance of the topics covered. They will also be assumed to have been read for the midterm.

“What is ESG,” ESG Manager Portfolio, 2011, 1pp, (ESG definitions) http://www.esgmanagers.com/Sustainable_Investing/What_is_ESG

“Why Environmental Externalities Matter to Institutional Investors”,PRI & UNEP, 2011, 50pp, (“A great deal of this environmental damage is caused by the way we do business..”) http://www.unepfi.org/fileadmin/documents/universal_ownership_full.pdf

C. McKnett, “The Evolution of ESG Investing,” State Street Global Advisor, 2011, 3pp, (Evolution of ESG) http://www.ssga.com/library/povw/ESG_Benchmarks_The_Evolution_of_ESG_Investing_McKnett_11.25.11CCRI1325191416.pdf

“Shareholders press Boards on Social Environmental Risks” , Ernst & Young, 2011, 8pp, (Social-Environmental Shareholders proposals) http://www.ey.com/Publication/vwLUAssets/CCaSS_social_environmental_risks/$FILE/CCaSS_social_environmental_risks.pdf

Daniel T. Allen, “The Next Step for ESG Investing: Moving from What and Why to How”, Ativo Capital Management LLC, 2010, 2pp, (ESG moving forward) http://www.hedgetracker.com/article/The-Next-Step-for-ESG-Investing-Moving-from-What-and-Why-to-How

Optional Background and Further Reading:

J. Bavaria, “looks ahead”, 2007, (Social Responsible Investing in the next 15 years?) http://grist.org/article/the-future-of-socially-responsible-investing/

K. Gladman, “The 10 Myths about Sustainability Reporting”, The Corporate Library, 2010, 4pp, http://info.thecorporatelibrary.com/Portals/30022/docs/unpri_p3_sustainabilityreporting.pdf

Week 2. Topic: Essential Background: Corporate Governance

Course assignments and assessment method

Lecture:

Corporate governance

Roles of directors and management

Shareholders vote for Corporate Directors to represent them

Corporate Governance Issues: Board diversity, Independent directors, Executive compensation.

‘Golden parachutes’, ‘Poison pills’

Board committees

Interlocking boards

Key Referential Context for this topic:

The Corporate Library

Yale Corporate Governance Forum

Global Proxy Watch Reading Assignments: ~80pp

Bebchuk, Weisbach, “The state of Corporate Governance”, 2009, 35pp, (reviews and comments on the state of corporate governance research) http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1508146

C. Moscow, “Corporate Governance, the Representative Director Problem”, 2003, 8pp, (a more realistic and nuanced legal approach to the position of a representative director) http://www.honigman.com/files/Publication/373290f2-2ff2-498f-a2be-fcb786f6d380/Presentation/PublicationAttachment/7688914d-81d2-4e38-9720-d809182852b7/imgimgMoscow.pdf

McNamara, “Typical Types of Board Committees,” http://managementhelp.org/boards/committees.htm

R. Ferlauto, “Protecting Shareholders and Enhancing Public Confidence by Improving Corporate Governance”, 2009, 6pp, (Ferlauto’s testimony) http://banking.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=5fe2d48f-1bb7-4dcb-bd1a-a7fab34efb0f

La Porta, De Silanes, Shleifer, “Investor protection and corporate governance”, 30pp, (investor protection, corporate governance, law) http://mba.tuck.dartmouth.edu/pages/faculty/rafael.laporta/docs/publications/LaPorta%20PDF%20Papers-ALL/InvestProtet-CorpGovnance-All/Investor%20Protection-CorpGov.pdf

Optional Background and Further Reading:

R.J. Jackson, “Will the SEC facilitate shareholder access to the ballot under rule 14a-8”, Columbia Law School, 2012, (EC should make clear that it will apply Rule 14a-8 in a way that will give investors a meaningful opportunity to adopt the proxy access rules that shareholders prefer.) http://blogs.law.harvard.edu/corpgov/2012/04/29/will-the-sec-facilitate-shareholder-access-to-the-ballot-under-rule-14a-8/#more-27612

The corporate library/GMI, “ESG rating”, 2012, 12pp, (evaluate the sustainable investment value of public corporations) http://www3.gmiratings.com/wp-content/uploads/2012/06/GMIRatings_ESGWhitepaper_062012.pdf

“Principle for Responsible Investing”, PRI & UNEP, 2011, 6pp, (There is a growing view among institutional investors that environmental, social and corporate governance (ESG) issues can affect the performance of investment portfolios. The Principles for Responsible Investment provide a framework to assist investors in considering these issues) http://www.unglobalcompact.org/docs/issues_doc/Financial_markets/PRI_Brochure_electronic_version.pdf

H. Van Buren, “Corporate Governance”, http://www.docslide.com/corporate-governance-7/

Week 3. Topic: Investor Rights and Fiduciary Responsibility Possible Guest Speaker (from among those listed among the panel choices for Week 14).

Lecture:

Legal rights of investors in the U.S. and internationally

Securities and Exchange Act (1934) and regulation

Public equity shareholders or shareowners Shareholder proposals SEA Rule 14a-8

Proxy-voting and guidelines

Fiduciary responsibility: Duty of care, Duty of prudence

Key attorneys: Paul Neuhauser, Con Hitchcock, Association of Corporate Secretaries Reading Assignments: ~70pp

Stephen Davis, Shareholder Rights Abroad

Securities and Exchange Act, 1934 , SEC, 2012, skim, (Regulation of SEC) http://www.sec.gov/about/laws/sea34.pdf

Rule 14a-8, SEC, 2001, (Avenues of communication between shareholders and companies through shareholder’s proposals) http://www.sec.gov/interps/legal/cfslb14.htm

Rule 14a-8, University of Cincinnati, 2009, (More informations about Rule 14a-8) http://taft.law.uc.edu/CCL/34ActRls/rule14a-8.html

Proxy voting, US SIF, 2010, (A tool for shareholders to promote and vote resolutions) http://ussif.org/projects/advocacy/proxyvoting.cfm

“Oversight of Fund Proxy-Voting”, IDC&ICI, 2008, 12pp, (Funds’ responsibilities related to voting proxies) http://www.ici.org/pdf/ppr_08_proxy_voting.pdf

Chazen, Covington and Burling, “The Shareholders’ Right by Law: Giving Shareholders a Decisive Voice,” 1997, ~11pp, (Corporate governance issues) http://www.cov.com/files/Publication/441efd96-7c36-4c31-8930-6f4cbdd74990/Presentation/PublicationAttachment/14256e9d-8bb6-4810-970d-79c7cce0585c/oid6076.pdf

G.M. Cheeseman, “Moxy Vote Makes Shareholder Activism easy”, 2010, (web-based startup enables shareholders to vote online on corporate actions) http://www.triplepundit.com/2010/05/moxy-vote-makes-shareholder-activism-easy/

”A Legal Framework for the Integration of Environmental, Social and Governance Issues into Institutional Investment,” UNEP, 2005, pp. 6-28, (Freshfields report) http://www.unepfi.org/fileadmin/documents/freshfields_legal_resp_20051123.pdf

Bew & Fields, “Voting decision at US Mutual Funds: How investors Really use proxy advisers”, IRRC, 2012, 20pp, (Corporate voting and proxy firms in the spotlight) http://www.irrcinstitute.org/pdf/Voting_Decisions_at%20US_Mutual_Funds.pdf

Optional Background and Further Reading:

Simons, Powers & Gunnemann, “The Ethical Investors”, Yale, 1972, Legal rights, pp. 129 ff., (Legal Aspects of Investment Responsibility) http://acir.yale.edu/pdf/EthicalInvestor.pdf

“Fiduciary Responsibility”, PRI & UNEP, 2009, See PDF, ~50pp, skim, (Legal and Practical Aspects of Integrating Environmental, Social and Governance Issues into Institutional Investment – A Follow Up to Freshfields Report)

“Proxy-Voting Guidelines”, Domini Social Investments, 2008, Guideline Example, 50pp, skim, (Guideline and Procedures for Domini Social Investment Shareholders) http://www.domini.com/common/pdf/ProxyVotingGuidelines.pdf

Week 4. Topic: Shareowner Methods of Engagement

Assignment of first paper, due Week 6.

The first paper (500 words max.) will consist of writing a shareholder resolution on a choice of possible

issues. Students will work in pairs, one as the sustainability expert, and one as the investor.

Lecture:

Purposes of shareholder resolutions

Mechanics of how shareowners engage with corporations

Shareholder resolutions

Prerequisites: $2000 of stock held for over 1 year

Filing deadlines 120 days prior to corporate annual meeting of stockholders

Strict limitations: 500-word maximum, Resolved clause

Filer, co-filers

Annual meeting requirements: Moved by proponent representative, with max 3-min speech

Seconded by a co-filer representative

Meeting attendees must be stockholders or carry stockholder proxies

Key Institutional investor perspective and organizations ICCR, CII, ICGN

Results of shareowner engagement.

Reading Assignments: ~50pp

“Shareholder Engagements, A promising SRI practice”, Novethic Research, February, 2011, 30pp, skim , (The concept of engagement, primarily in Europe) http://www.novethic.com/novethic/v3_uk/upload/Note_Engagement_EN_2011.pdf

A. Fontinelle, “Ethical investing: Investor Activism and Shareholder advocacy”, (methods activist investors commonly use) http://www.investopedia.com/university/ethical-investing/ethical-investing7.asp#axzz1yrqgxa8U

Goodman, Kron & Little, “The Environmental Fiduciary”, Rose Foundation, 2010, Ch. 4, ~12pp, skim first part, (Recommendations to Unlock Environmental Value) http://www.rosefdn.org/downloads/EFreport.pdf

GS Sustain, Goldman Sachs, 2007, skim, (analysis of the sustainability of corporate performance) http://www.natcapsolutions.org/business-case/GoldmanSachsReport_v2007.pdf

Optional Background and Further Reading:

“Corporate Environmental Governance: A Study Into the Influence of Environmental Governance and Financial Performance”, Environment Agency, 2004, 120pp, skim, (Resolution example) http://www.forceforgood.com/Uploaded_Content/tool/42200995554231.pdf

O’Rourke, “A New Politics of Engagement: Shareholder Activism for Corporate Social Responsibility”,

2002, PDF, 32pp, (current trends towards shareholder activism for CSR)

Week 5. Topic: Corporate Response

Lecture:

SEC challenges

Grounds for corporate rejection of shareholder proposals: SEA Rule 14(a)8

‘Mootness’ and ‘Ordinary Business’

Simultaneous fighting and negotiating

Role of lawyers, for corporations, for shareowners

Role of sustainability experts

IRRC, ISS, RiskMetrics

Key Corporate organizations and perspective, Association of Corporate Secretaries, infiltrating CII,

ICGN, Association of Corporate Secretaries Reading Assignments: ~60pp

S. Wong, “Effective Board Engagement with Shareholders”, 2009, (Building long term trust) http://www.brunswickgroup.com/insights-analysis/brunswick-review/brunswick-review-issue-2/features/effective-board-engagement/page3.aspx

Mark Goldstein, “The State of Engagement Between U.S. Corporations and Shareholders”, IRRC

Institute, 2011, 25pp, (benchmarking of the level of engagement between investors and pub‐ lic corporations (issuers) in the United States)

“Governance Risk Indicators: a New Measure of Governance-Related Risk”, RiskMetrics, 2010, 8pp, (tool to help investors better assess the level of governance-related risk at portfolio companies) http://www.issgovernance.com/files/grid_white_paper.pdf

Vandekerckhove, Leis, Braeckel, “That’s not What Happened and it’s not my Fault Anyway!”, Business ethics, 2000, pp. 406-415, (Expectations of Management response and management reaction)

“Corporate response: How sustainability expanded the role of CFO?,” Ernst & Young, 2011, ~7pp,(CFOs are getting involved in the management, measurement and reporting of the companies’ sustainability activities), http://www.ey.com/Publication/vwLUAssets/Sustainability_extends_CFO_role/$FILE/CFOSustain.pdf

“Board Oversight of Environmental and Social Issues: An Analysis of Current North American Practice,” Calvert Investment & The Corporate Library, 2010, (corporate response), ~20pp, http://info.thecorporatelibrary.com/Portals/30022/docs/unpri_tclcalvert_esoversight.pdf

Optional Background and Further Reading:

A. Cramer, “Boards and Sustainability: a Look”, 2012, (how board engagement is likely to evolve) http://www.bsr.org/en/our-insights/bsr-insight-article/boards-and-sustainability-a-look-ahead

Examples of current shareholder engagement with corporation, http://www.triplepundit.com/topic/shareholder-activism/

Ioannou, Serafeim , “What Drives Corporate Social Performance? International Evidence from Social, Environmental and Governance Scores”, Harvard Business School, 2010, 30pp, (institutional drivers of Corporate Social Performance (CSP) [...] social, environmental and governance performance) http://www.hbs.edu/research/pdf/11-016.pdf

Week 6. Topic: Sustainability Issues for Shareowners

First paper due. Possible Guest Speaker: Leslie Lowe, Ex-Director, Energy and Environment Programs, Interfaith Center

on Corporate Responsibility

Lecture: Historical sequence of shareowner sustainability concerns: ICCR, Ceres, South Africa, Diversity, Equal

Employment, Indigenous issues Disclosure

Sustainability reporting Environmental issues:

Climate risk sectors: oil & gas, electric utilities, banking, autos, real estate, big box stores Global warming lobbying Genetically modified food Environmental racism Endorsing Ceres Principles Mountain-top removal

Human rights, Labor rights Reading Assignments: ~60pp

J. Wintergreen, “Climate Change Shareholders Resolutions”, First Environment, 1pp http://www.firstenvironment.com/html/climate_change_faq_3-sharehold.html

D.Cogan, “Corporate Governance and Climate Change”, CERES, 2008, 40pp, (63 companies examined in this report all face climate- and energy-related challenges through their operations, products and

supply chains) http://nbis.org/nbisresources/corporate_governance_design/corporate_governance%20_climate_change.pdf

J. Jung, “Getting ESG Risk in Financial Statements May Need Investor Muscle”, 2012, 2pp, (Investors role in pushing ESG agendas - the need of a clear framework) http://www.institutionalinvestor.com/Article/3052097/Asset-Management-Green-Investing/Getting-ESG-Risk-in-Financial-Statements-May-Need-Investor-Muscle.html

“The Sustainability Roadmap”, CERES, 2010, 75pp, skim, http://www.srmnetwork.com/pdf/whitepapers/CERES_Sustainability_Roadmap_Mar10.pdf

Disclosure definition from CERES website: http://www.ceres.org/company-network/how-we-work-with-companies/disclosure

Letter to Schapiro from The Social Investment Forum (Who, how and why investors are pushing SEC on ESG issues) http://www.socialinvest.org/documents/ESG_Letter_to_SEC.pdf

Optional Background and Further Reading:

“SEC Commission Guidance Regarding Disclosure Related to Climate Change”, SEC, Federal Register Vol. 75, 2010, 5pp, (interpretive release to provide guidance to public companies regarding the Commission’s existing disclosure requirements as they apply to climate change matters) http://www.sec.gov/rules/interp/2010/33-9106fr.pdf

M. Connor, “Sec on ESG?,” 2010, http://business-ethics.com/2010/03/04/1714-opinion-sec-on-esg/

“Corporate Governance & Climate Change: Making the Connection”, CERES, 2006, ~300pp, skim, (This report is the first comprehensive measurement of how 100 leading global companies are preparing and positioning themselves to face climate change) http://www.naider.com/upload/Ceres.pdf

Sustainability report example: Seventh Generation http://www.seventhgeneration.com/files/assets/pdf/2008_SevGen_Corporate-Consciousness.pdf

Week 7. Mid-Term Examination in Class

Week 8. Topic: Negotiation and Dialogue between Shareowners and Corporations Possible Guest Speaker: Bob Massie/Dan Bakal (see panel choices for Week 14). Assignment of second paper (5 pp), due Week 12. Evaluate the effectiveness of shareholder

engagement in a real world case. Procedure: Students will be paired, one writing from an investor and one from a corporate standpoint. Once this paper is submitted, students will each prepare a PowerPoint presentation the following week. Best papers will be selected to present to a panel of critics from the fields covered in the course.

Lecture:

Moving from adversarial negotiation to non-adversarial collaboration

Identifying an internal advocate on each side

How shareholder resolutions strengthen the hand of sustainability staff inside the corporations

Ceres Dialogue Orientation

Possible Guest Speaker: Bob Massie, New Economy Institute or Dan Bakal, Ceres Electric Utility Program

Reading Assignments: ~85pp

Ceres dialogue orientation manual and case studies

“Communicating ESG Value Drivers at the Company-Investor Interface”, IFC, The Global Impact, FDFA, ~30pp, (a series of recommendations, targeting different financial sector actors, which taken together seek to address the central issue of integrating environmental, social and governance (ESG) issues into mainstream investment decision-making and ownership practices), http://www.unglobalcompact.org/docs/issues_doc/Financial_markets/Zurich_Report_WhoCaresWins.pdf

S. Laasonen, “Corporate responsibility guaranteed by dialogue?”, 2012, pp. 27-37, (Consultation is a two-way process of dialogue between the project company and its stakeholders) http://info.tse.fi/julkaisut/vk/Ae2_2012.pdf

”If You Ask Us: Understanding Corporate Sustainability Disclosure Request,” North American Task Force, UNEP Finance Initiative, 2008, ~25pp, (Companies response to dialogue) http://www.unepfi.org/fileadmin/documents/if_you_ask_us.pdf

Optional and further reading:

R. Fisher, W. Ury, “Getting to yes,” 1991, (Negotiation basic reading)

http://6thfloor.pp.fi/fgv/gettingtoyes.pdf

Week 9. Topic: Effectiveness of Shareowner Engagement

Possible Guest Speaker (from among those listed among the panel choices for Week 14).

Lecture: Investor perspective Corporate perspective Most successful shareowner engagements Possible Guest Speaker: Doug Cogan, RiskMetrics, or Laura Berry, ICCR

Based on previous week’s lecture and reading, the first half the class will role play a shareholder dialogue

with a corporation in teams of 4: shareholder, sustainability expert, corporate secretary, director of

sustainability. Reading Assignments: ~80pp

J. Gifford, “Effective Shareholder Engagement”, University of Sidney, 2011, ~25pp, (This article seeks to determine which factors contribute to shareholder salience in improving the environmental, social and corporate governance (ESG)) http://www.unpri.org/files/articleb.pdf

K. Glac, “The Influence of Shareholders on CSR”, Center for Ethical Business Cultures, 2010, ~20pp (Shareholders as some of the most important allies for CSR) http://www.cebcglobal.org/uploaded_files/Glac_paper_on_Social_Investment_FINAL.pdf

J. Hall,T. O’Malley, “Corporate Governance and the Effectiveness of Shareholder Engagement”, 2009, ~45pp, skim, (corporate prospective) http://www.jcagroup.net/publications/Corporate%20Governance%20&%20Shareholder%20Engagement.pdf

“Translating ESG into Sustainable Business Value”, UNEP, 2010, ~30pp, (findings and key insights of a series of global workshops between business, investors and stakeholders about the environmental, social and governance (ESG)) http://www.unepfi.org/fileadmin/documents/translatingESG.pdf

“Shareholder Success in Climate, Energy & Sustainability”, CERES, 2012, ~4pp, (proxy-power) http://www.greenbiz.com/sites/default/files/Ceres_ProxyPower_brochure.pdf

Optional Background and Further Reading:

“Annual Report,” PRI, 2012, ~25pp, http://www.unpri.org/files/Annual%20report%202012.pdf

Week 10. Topic: Nature of Research; or Possible Case Study (TBD)

Lecture:

Understanding what makes a researchable question.

Expectations for Masters-level research.

(Guest lecture by Peter Marcotullio, Hunter College)

Case Study on effectiveness of Global Climate Coalition

What to do in their papers, questions

Second half the class role plays in teams of 4: shareholder, sustainability expert, corporate secretary,

director of sustainability. Reading Assignments: ~50pp

Global Climate Coalition shareholder resolution, and attending IRRC Proxy Report and SEC challenges

“Corporate Social Issues Report,”, RiskMetrics, 2008, 25pp, skim, (Social issues for 2008 season)

Optional Background and Further Reading:

“Shareowners Annual Meeting and Proxy Voting”, Coca Cola, 2012, ~85pp, skim, (Coca-Cola report) http://www.thecoca-colacompany.com/investors/2012_coca-cola_proxy.pdf

H. Welsh, M. Passoff, ”Proxy Preview,” 2012, ~57pp, (2012 proxy season overview) - http://asyousow.org/publications/2012/ProxyPreview2012.pdf

Others to be selected from wide array of climate change resolutions

Ameren resolution, Electric Utility, GHG and Air emission reduction, 4pp, (Resolution example)

AvalonBay communities, Shareholder resolution, Sustainability report request, 2012, 8pp, (Resolution example)

Amazon resolution on Climate risk disclosure, 2012, ~3pp, (Resolution example) http://www.ceres.org/incr/engagement/corporate-dialogues/shareholder-resolutions/amazon.com-climate-risk-disclosure-2012

Chevron resolution memo, independent board member with environmental expertise, 2012, 6pp, (Resolution example)

Report example Shareowners annual meeting and proxy voting, Coca Cola, 2012, 89pp, skim, (Resolution example) http://www.thecoca-colacompany.com/investors/2012_coca-cola_proxy.pdf

Week 11. Topic: Investment Asset Classes

Possible Guest Speaker Vonda Brunstig, Capital Stewardship Program, SEIU (see panel choices for

Week 14).

Lecture:

Investor engagement in asset classes other than public equity

Private equity

Fixed income

Infrastructure

Property real estate Reading Assignments: ~100pp

C. Cernich, S. Fenn, Anderson, Westcott, “Effectiveness of Hybrid Board,” May 2009, ~77pp, skim (study examines whether “hybrid” boards create value for the shareholders) http://www.irrcinstitute.org/pdf/IRRC_05_09_EffectiveHybridBoards.pdf

“Responsible Investment in Private Equity”, PRI, 2009, ~14pp, ~20pp, (Document and Case studies), http://www.unpri.org/files/PE%20LP%20Guide%20FINAL.pdf ,http://www.unpri.org/files/PE%20case%20studies%20FINAL.pdf

“Implementing Responsible Property Investment Strategies”, UNEP, 2011, ~15pp, (a framework for implementing RPI strategies) http://www.unpri.org/files/ResponsiblePropertyInvestmentToolkit.pdf

“The Responsible Investor’s Guide to Commodities” , PRI & OnValues, 2011, ~26pp, (goal of this work was to improve the understanding of environmental, social and governance (ESG) issues in commodity investments with a view to identifying and promoting best practice in this area) http://www.unpri.org/publications/commodities_2011.pdf

“Responsible Investments in Infrastructure”, PRI & UNEP, 2011, ~25pp (Infrastructure is becoming an increasingly popular asset class amongst institutional investors) http://www.unpri.org/files/Responsible_investment_in_infrastructure_A_compendium_of_case_studies.pdf

Week 12. Topic: Spectrum of Other Investor Roles

Second paper due.

Possible Guest Speaker: Donna Katzin, Shared Interest, formerly directed ICCR’s South Africa

divestment campaign (see panel for Week 14).

Lecture:

Selective investment, ethical investing, responsible investing

Rating corporations ESG performance

Return on socially responsible investments

US Social Investment Forum Trends Report

Divestment:

Community Investment Reading Assignments: ~55pp

Gladman, “The 10 Things to Know About Responsible Investment and Practice”, GovernanceMetric International, 2011, ~8pp, http://info.thecorporatelibrary.com/Portals/30022/docs/responsible%20investment%20032011.pdf

“Our ESG Rating”, GMIRating, 2012, ~12pp, (evaluate the sustainable investment value of public corporations)

“Accelerating Low Carbon Growth”, PWC for CDP, 2011 Report, ~75pp, skim (Low carbon growth is now widely accepted as fundamental to generating long term shareholder value) https://www.cdproject.net/CDPResults/CDP-G500-2011-Report.pdf

“A climate for a change”, Mercer Consulting & Carbon Trust, 2005, ~35pp

Ethical Investing: chapter 13, shareholder activism? (a little old)

Optional Background and Further Reading:

“Demystifying Responsible Investment Performance”, UNEP-FI/Mercer Consulting, Oct. 2007, ~50pp, (a review of twenty academic research papers that examine the link between ESG factors and investment performance) www.unepfi.org/fileadmin/documents/Demystifying_Responsible_Investment_Performance_01.pdf

”An Investor’s Perspective on Environmental Metrics for Property,” UNEP-FI, 2011, (framework to assess

property investment), http://www.unepfi.org/fileadmin/documents/EnvironmentalMetrics.pdf

Almanac: Evaluating the cost of Socially Responsible Investing. Chapter 28

Almanac: Fiduciary duty and institutional shareholder activism chapter 6 and 7.

Week 13. Topic: Social Business and Ventures

Possible Guest Speaker: Jan Morgan, CSR Wire (see panel choices for Week 14).

Lecture:

Reading Assignments:

J. Perron, “Promoting and Developing Social Business: a French Perspective,” Grameen Credit Agricole, 2011, ~11pp, skim http://www.grameen-credit-agricole.org/sites/grameen/files/jounal_sb_combine.pdf

J. Gregory Dees, B. Anderson, “For Profit Social Ventures,” Social Entrepreneurship, 2003, (a social purpose with a for-profit organizational structure) http://www.caseatduke.org/news/documents/DeesAndersonCASE.pdf

C. Shanmugalingam, J. Graham, Perron http://www.youngfoundation.org/files/images/Growing_Social_Ventures.pdf

Week 14. Topic: Selected Student Presentations to a Panel of Critics

Opportunity for students to exhibit their work to practicing professionals, as sources of ideas, and avenues to future internships or employment. The class would be extendable, if needed, and include refreshments. Presenting: 4 teams of 2 people, each for 5 mins, with 5 mins Q&A.

Panel of Guest Critics selected from among:

Beth Young, The Corporate Library and Visiting

Lecturer, Harvard Law School

Vonda Brunstig, Capital Stewardship Program,

SEIU

Mike Garland, Director, Corporate Governance,

NYC Comptroller’s Office

Laura Berry, Executive Director, Interfaith Center

on Corporate Responsibility (ICCR)

Leslie Lowe, formerly Director of Energy &

Environment Programs, ICCR

Ken Sylvester, Ex-Assistant NYC Comptroller for

Policy

John Wilson, Director of Corporate Governance,

TIAA-CREF

Julie Tanner, Director of Sustainability, Christian

Brothers Investment Service

Tim Smith, Senior VP, Walden Asset Management

Ingrid Dyott, Director of Socially Responsible

Investment, Neuberger Berman

Laura Campos, Nathan Cummings Foundation

Steve Lydenberg, Domini Social Investments, and

Director, Responsible Investment Institute,

Harvard Kennedy School

Donna Katzin, Executive Director, Shared Interest

Doug Cogan, RiskMetrics, originally IRRC

Bob Massie, President, New Economy Institute

Dan Bakal, Director, Electric Utility Programs,

Ceres

Jan Morgan, COO, CSRWire

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APPENDIX A

Student Information Page

SUMA K-TBD INVESTORS IN CORPORATE SUSTAINABILITY MANAGEMENT Please complete this information page and return it to me at the next class meeting. I will use this information to plan the semester, to get to know you, and to contact you by email or phone if the need arises. I will not share this information with anyone without your consent. Name_______________________________ Student ID# __________________ Contact me by phone at: Home:___________________

Work:___________________

Other:___________________

My UNI email address: _________________________ Backup email address: ___________________________________ Indicate the semester and year in which you completed these course prerequisites: [Insert course name and number]: ______________ [Insert course name and number]: _______________ Identify the degree program or certificate program you are in: Explain why you are you taking this course and how it fits into your degree or certificate program. What are your expectations for the course? Briefly describe related experiences or courses that are relevant to this course: If you require special accommodations, please indicate that below and be sure to discuss them with me soon.

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APPENDIX B

Accessibility Statement

Columbia is committed to providing equal access to qualified students with documented disabilities. A student’s disability status and reasonable accommodations are individually determined based upon disability documentation and related information gathered through the intake process. For more information regarding this service, please visit the University's Health Services website: http://health.columbia.edu/services/ods/support