ABSTRACT
When newcomers to the field of responsible investment learn that it incorporates environmental, social, and governance (ESG) factors into investment decision-making, ‘governance’ is often the least well understood of the three terms. This may be because environmental and social issues were first raised in an investment context by retail investors and by activist movements familiar to the general public, such as the anti-apartheid movement of the 1970s and 1980s. While the ways that investors approach E and S issues have grown increasingly varied over the past several decades, the issues and language involved (e.g., climate change, human rights, or employee safety) are still fairly accessible to people without specialized knowledge. Corporate governance, in contrast, has been a focus of attention primarily for institutional investors, and discussions of it often dwell on features that may seem obscure or technical to a layperson (e.g., plurality voting, restricted stock, or poison pills).
