Climate Change as Systemic Risk

Governments have tended to treat climate change as primarily an issue of environmental policy. Recent climate change-related events, ranging from hurricanes to forest fires to floods, and their devastating effects on the global economy, however, are gradually alerting regulators and governments to the risks of climate change to financial stability. This has spurred action in several countries, as well as globally, to address climate change as a financial risk. Nevertheless, the U.S. has been notably absent from these efforts despite being the home to several large financial markets.

Covid-19 has also highlighted the perils of ignoring seemingly non-financial risks. Perhaps … Read more

Corporate Governance that Works for Everyone

Corporate governance has traditionally been viewed as a way to reduce agency costs between shareholders and managers in the context of private ordering.  Laws and regulations pertaining to corporate governance have, therefore, typically aimed to enhance long-term wealth for shareholders.

Governments have in recent years, however, discovered a new use for corporate governance: advancing the public interest. This has been done by promoting everything from environmental causes to gender diversity to humanitarian aid. In the United Kingdom, the government has been explicit in advocating this view of corporate governance.  Prime Minister Theresa May has expressly noted that corporate governance should … Read more

Promoting Social Goals with Corporate and Securities Law

Should governments be relying on corporate and securities law to promote humanitarian goals?  This is the question that naturally arises when viewing the SEC’s Conflict Minerals Payment Rule, which requires corporations to disclose their conflict mineral usage as a means of curtailing the violence in the Congo. Yet the US is not alone in its reliance on disclosure mechanisms in corporate or securities laws to promote non-economic goals. The Danish government uses disclosure to promote gender parity on boards of directors; France relies on it to curb greenhouse gas emissions, and India uses it as a method for curtailing energy … Read more