Recent money management industry conferences agendas and speakers reflect a new, dramatic recognition that ESG considerations, diversity, and social issues such as income inequality are being amplified by the pandemic — and that the industry needs to address them.
That does not mean that institutional investors, money management executives and corporate leaders agree on how to take action. But these topics came out from the wings to center stage at recent conferences, all held virtually due to the COVID-19 pandemic.
For instance, the upcoming NCREIF Fall Conference, Nov. 5-13, is devoting a session to the role of real estate reporting standards in ESG as the "prominence of ESG considerations for real estate investment continues to explode," the agenda says.
The Milken Institute Global Conference, held Oct. 12-21, tackled everything from stakeholder capitalism to affordable housing.
During a panel on stakeholder capitalism — the idea that companies should serve all stakeholders including their employees, customers and local communities as well as their shareholders — Christopher J. Ailman, CIO of the $257.9 billion California State Teachers' Retirement System, West Sacramento, spoke about the need for corporations to focus on the long term, considering all stakeholders including the companies' impact on the environment and the communities they touch.
Corporate boards and company top executives are incentivized for short-term results, and CEOs focus on increasing profits in the near term instead of thinking what is good for the company in the next 10 years, he said.
"We own stock for 30 years … For me, the time period is very real," Mr. Ailman said. "I don't need a return in 91 days … I need a return that is generational."
A good company treats its employees fairly, properly takes care of its waste products and does not pollute because those actions have a long-term impact, he said.
Dambisa Moyo, a global economist, author and board member of 3M Co. and Chevron Corp., who spoke on the same panel as Mr. Ailman, said she didn't think corporate short-termism was still a concern since many companies have already addressed the issue by not promoting company executives who do not take a long-term view.
"Yes, I think we want corporations to be good citizens," she said in response to a question about whether crony capitalism is real.
But at the same time, people are spending time and energy trying to fix corporations when the real ailment is ineffective government, she said. The government should provide regulations to stamp out bad behavior, she said.
Corporations should not be required to solve issues such as climate change that really should be within the purview of the government, Ms. Moyo said.