Research in Partnership

Engine No. 1

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative, Deloitte & Touche Professor of Management, The Wharton School

Engine No 1 sought to estimate the dollarized value of positive and negative externalities created by the S&P 500 and the materiality thereof for stock price performance. Using advanced data imputation and a combination of traditional and non-traditional data, Vice Dean Henisz led the development of the Total Value Framework dataset. The dataset has since been expanded to cover the Russel 1000.

Read the report

Calvert Institute

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative, Deloitte & Touche Professor of Management, The Wharton School; Chris Bruno, Doctoral Student in Management, The Wharton School

The Calvert Institute sought to analyze the link between ESG performance at the county level in US and municipal credit risk as perceived at time of issue and over medium- to long-term. A research team led by Vice Dean Henisz and Doctoral student Chris Bruno built a custom county-level dataset of ESG performance across a wide range of factors and linked it to municipal bond pricing data to conclude that ESG performance was negatively associated with credit yield spreads over time but not correctly priced at issue. Ongoing research seeks to explore corporate role in local ESG outcomes.

Read the paper

Download the report

Read blog post

Ceres

Daniel Garrett, Assistant Professor of Finance, The Wharton School; Harald Puhr, Assistant Professor of International Management, University of Innsbruck; Witold Henisz, Vice Dean and Faculty Director, ESG Initiative, Deloitte & Touche Professor of Management, The Wharton School; Kevin Chuah, Assistant Professor of International Business and Strategy, D’Amore-McKim School of Business, Northeastern University

Ceres sought to analyze the link between (potential) restrictions on contracting with asset managers engaged in ESG investing and higher fees paid or lower returns for state pension funds.

TIAA Institute

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative,  Deloitte & Touche Professor of Management, The Wharton School; Michael Gavin, Professor of Human Dimensions of Natural Resources, Colorado State University; Leandro Pongeluppe, Assistant Professor of Management, The Wharton School; James McGlinch, Founder and Chief Investment Officer, PineLodge Capital LLC

The TIAA Institute provided financial support for research assessing the contingent materiality of ESG issues for different financial outcomes across industries and firms as well as time with the goal of providing actionable guidance to their internal process of ESG integration. A research team comprised by Vice Dean Henisz, Senior Fellow Michael Gavin, Professor Leandro Pongeluppe and doctoral student James McGlinch demonstrated the importance of dynamic media weights for ESG factors, the potential of non-traditional methodologies for financial data including structural equation modeling and qualitative comparative analysis.

The Diligent Institute

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative, Deloitte & Touche Professor of Management, The Wharton School; Kevin Chuah, Assistant Professor of International Business and Strategy, D’Amore-McKim School of Business, Northeastern University; Samantha Darnell, Doctoral Candidate in Management, The Wharton School; Chris Bruno, Doctoral Student in Management, The Wharton School; Emily Ulrich, Doctoral Student in Management, The Wharton School

The Diligent Institute sought to analyze how firms should best respond to ESG activists. A research team led by Vice Dean Henisz with support from Research Fellow Kevin Chung, Doctoral Students Samantha Darnell, Christopher Bruno and Emily Ulrich combined multiple datasets on corporate governance, media engagement by top management teams, emissions, and ESG performance to understand which firms activists target and how firms can dampen or best respond to activist pressures.

 Environmental Defense Fund (EDF)

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative, Deloitte & Touche Professor of Management, The Wharton School; Kate Odziemkowska, Assistant Professor of Strategic Management, Rotman School of Management, University of Toronto; Samantha Darnell, Doctoral Candidate in Management, The Wharton School

EDF sought to analyze whether the tactics of and response to the anti-ESG counter-movement by corporations are analogous to or distinct from those of the ESG movement. A research team comprised of Vice Dean Henisz, research fellows Kate Odziemkowska and Tony He and Doctoral Student Samantha Darnell built a corpus of all media-reported anti-ESG discourse. They are analyzing which firms are targeted as well as firms’ responses to that targeting (e.g., greenhushing, defensive, counter-attack, …) and the efficacy thereof.

Engine No. 1

Rachelle Sampson, Assistant Professor of Logistics, Business and Public Policy, Smith School of Business, University of Maryland; Nathan Barrymore, Assistant Professor of Business, Government and Society, McCombs School of Business, University of Texas, Austin

Engine No 1 sought to explore the link between firms’ wage distributions as compared to peers and turnover as well as labor productivity. Research fellows Rachelle Sampson and Nathan Barrymore used proprietary data acquired from Revel.io Labs to show important contingency based upon the degree of labor market competition. This funding suggests that public policy (i.e., minimum wage) may be needed to insure living wage in labor markets with limited competition.

Read the working paper

FCLT Global

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative,  Deloitte & Touche Professor of Management, The Wharton School; Rachelle Sampson, Assistant Professor of Logistics, Business and Public Policy, Smith School of Business, University of Maryland; Nathan Barrymore, Assistant Professor of Business, Government and Society, McCombs School of Business, University of Texas, Austin; Chris Bruno, Doctoral Student in Management, The Wharton School; Emily Ulrich, Doctoral Student in Management, The Wharton School

FCLT sought to analyze the business case for different combinations of stakeholder-oriented discourse (i.e., talk) as well as tangible stakeholder outcomes (i.e., walk). A research team comprised of Vice Dean Henisz, Research Fellows Sampson and Barrymore and Doctoral Students Christopher Bruno and Emily Ulrich found that

• Firms that both “walk” and “talk” outperform their peers on return on invested capital and sales growth particularly over the long-term
• Focusing exclusively on labor or worker orientation generated similar results (but also supported more general stakeholder orientation construct and its link to firm-level performance rather than efforts to segment by stakeholder.)

Working Paper 1

Working Paper 2

CPA-Zicklin Index

In collaboration with the Center for Political Accountability, the Zicklin Center for Corporate Governance and Business Ethics provides novel data on firms’ transparency of corporate political activity as well as the governance thereof.

Engine No. 1

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative, Deloitte & Touche Professor of Management, The Wharton School; Tony He, Assistant Professor of Management and Global Business, Rutgers Business School; Timothy Werner, Professor of Business, Government and Society, McCombs School of Business, University of Texas, Austin; Matthew Josefy, Associate Professor of Strategy and Entrepreneurship, Kelley School of Business, Indiana University

Engine No 1 supported research by the Political Risk and Identity Lab to analyze the reputational risks of inconsistency in the corporate political and ESG strategies of US firms. Using state-level lobbying disclosure data to impute national lobbying efforts and positions, we identify firms lobbying in a manner that contravenes their public ESG policies and practices (e.g., do they lobby against climate regulation but promote themselves as green)? These firms are at heightened risk of reputational attacks ostensibly because of the inconsistency or lack of authenticity between their external stakeholder strategies

The Research Council of Norway

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative, Deloitte & Touche Professor of Management, The Wharton School; Anne Jamison, Assistant Professor of International Economics, Government & Business, Copenhagen Business School; Brian Ganson, Professor and Head of the Centre on Conflict & Collaboration, University of Stellenbosch Business School

The Research Council of Norway is supporting a research team in the Political Risk and Identity Lab led by Vice Dean Henisz, Research Fellows Anne Jamison and Brian Ganson to build a data platform to study the role of business in conflict systems with a focus on the African continent. The team analyzes media event data and other unstructured text to understand who is cooperative or in conflict with a firm where, when and why. Output from this project includes multiple peer reviewed academic papers including

• Demonstrating the predictive power of media sentiment data for armed conflict events
• Analyzing the impact of development finance funded private investments on conflict systems and comparing the performance of different development finance institutions
• Analyzing the impact of green infrastructure projects on conflict systems
• Analyzing the impact of the inscription of a cultural heritage site onto the UNESCO World Heritage list on conflict systems (with Penn Integrates Knowledge Professor Lynn Meskell)
• Analyzing the impact of alignment between corporate attention to issues and local attention to those issues on stakeholder sentiment towards corporations; and
• Analyzing the impact of overlapping grievances within a narrow geographic area on different issues for the escalation of conflict in that area

The Bay & Paul Foundations

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative,  Deloitte & Touche Professor of Management, The Wharton School; Anne Jamison, Assistant Professor of International Economics, Government & Business, Copenhagen Business School; Doron Tadmor, Doctoral Student in Management, The Wharton School

The Bay & Paul Foundations have supported the Political Risk and Identity Lab in harnessing the Business and Conflict Barometer to analyze the material of indigenous land claims for a wide range of multinational corporations and global projects. Output from a research team of Vice Dean Henisz, Research Fellow Anne Jamison and Doctoral Student Doron Tadmor have included

• A literature review and interviews with indigenous board members to highlight the importance of indigenous representation on corporate boards.
• Using the Business and Conflict Barometer data, we show that Foreign Direct Investment proximate to indigenous land claims aggravate conflict risk. We further find this effect to be driven by rebels (on behalf of Indigenous people) who target multinational corporations and the governments who offer them the formal license to operate.
• Building on this analysis, the research team is constructing a publicly accessible searchable database to see where in the world individual firms are exposed to indigenous rights risks and engaged in conflict with indigenous communities as well as over what issues.
• For a subset of these cases, the research team aided by law school student Victor Cabezas are assessing the financial materiality of such conflict using the disclosures, legal and regulatory records of several dozen projects.

EY

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative,  Deloitte & Touche Professor of Management, The Wharton School; Anne Jamison, Assistant Professor of International Economics, Government & Business, Copenhagen Business School; Anastasia Gracheva, Doctoral Student in Management, The Wharton School

EY has supported the Political Risk and Identity Lab in developing tools to analyze the material impact of political risk events and efficacy of firms’ mitigation strategies. Output from a research team of Vice Dean Henisz, Research Fellow Anne Jamison and Doctoral Student Anastasia Gracheva has included

• a comprehensive literature review of more than two decades of empirical publications examining the material impact of political risk
• seed funding to support the development of the Business and Conflict Barometer data science tool to assess how firms are perceived in media reported events in different locations on different themes by different stakeholders with the ability to cross-reference this information to other geolocated and time stamped data on corporate or societal outcomes;
• a study showing that the impact of political risk on stock prices is conditional on firm exposure and asset specificity
• surveys assessing the political risk management capability of 1000 multinational firms
  • 2021 Report
  • 2020 Report
• Qualitative interviews to explore political risk management capabilities of client firms
• Co-authoring practitioner-oriented book on Geostrategy by Design: How to Manage Geopolitical Risks in the New Era of Globalization
  • See webinar

Brown Advisory

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative,  Deloitte & Touche Professor of Management, The Wharton School; Anne Jamison, Assistant Professor of International Economics, Government & Business, Copenhagen Business School; Lauren Ferry, Assistant Professor of Political Science, University of Mississippi

Brown Advisory sought to analyze whether a country’s ESG performance impacts its sovereign credit risk. A research team led by Vice Dean Witold Henisz with Research Fellows Anne Jamison and Lauren Ferry analyzed media event data on ESG factors and political risk in conjunction with sovereign fixed income pricing data concluding that the real-time media event data on socio-political risk provides material information to investors.

Read the working paper

BlackRock

Witold Henisz, Vice Dean and Faculty Director, ESG Initiative, Deloitte & Touche Professor of Management, The Wharton School; Anne Jamison, Assistant Professor of International Economics, Government & Business, Copenhagen Business School; Anastasia Gracheva, Doctoral Student in Management, The Wharton School

BlackRock requested the development using the Business and Conflict Barometer tool of a new typology of socio-political grievances expressed by stakeholders towards a firm in a place. Preliminary correlational research by a research team of Vice Dean Henisz, Research Fellow Anne Jamison and Doctoral Student Anastasia Gracheva demonstrates the financial materiality of greater support from stakeholders.

Children’s Investment Fund Foundation (CIFF)

Kevin Chuah, Assistant Professor of International Business and Strategy, D’Amore-McKim School of Business, Northeastern University; Kenneth Chung, Postdoctoral Research Associate, The Wharton School; Witold Henisz, Vice Dean and Faculty Director, ESG Initiative, Deloitte & Touche Professor of Management, The Wharton School; Anne Kellers, Research Fellow, The Wharton School; Martin Fuchs, Research Fellow, The Wharton School

The research team led by Research Fellow Kevin Chuah and postdoctoral fellow Kenneth Chung together with Vice Dean Henisz and Research Fellows Anne Kellers and Martin Fuchs link the engagement, activist, public relations and lobbying efforts of climate activists to firm-level climate and governance outcomes captured from a wide array of primary and secondary data. Initial findings show diminishing impact of repeated engagements on climate disclosure. More coordinated and aggressive efforts are likely necessary to achieve carbon reduction targets.