The Third Stage of Corporate Governance

The recent announcements from major institutional investors about issues such as gender diversity and climate change seem like reactions to social ills.  But they are not unmoored from investing. They are logical expressions of a relatively newly empowered, third phase of corporate governance that tries to improve risk-adjusted return through the use of systems-level risk mitigation.

For example, London-based Legal and General Investment Management (LGIM) announced it will vote against the chair of any board of directors that is not at least one-quarter female. It joins State Street Global Advisors, which paid for the “Fearless Girl” statue on Wall Street, … Read more