Purpose

To provide a living laboratory for students interested in applied study of contemporary corporate governance issues.

Background

Issues of organizational stewardship and social responsibility have emerged as key concerns of stockholders and stakeholders in the 21^st century. Besides pursuing the objective of shareholder value maximization, corporate leaders have increasingly recognized that companies can create value for both shareholders and society by embracing responsible business practices and considering the interests of all stakeholders.

In addition, the domain of investor activism, traditionally occupied by faith-based organizations, has expanded to include professional investors (i.e., hedge funds, long-only and index managers). In the past, the investment business typically outsourced their fiduciary responsibility for the voting of annual proxies to the proxy advisory industry (i.e., Institutional Shareholder Services (ISS) and Glass-Lewis). This has changed as institutional asset owners and retail investors have taken a deeper interest in the policies and activities of corporations and governments.

Pope Francis has also provided guidance in his 2014 encyclical, Laudato Si: On Care for our Common Home:

Authentic human development has a moral character. It presumes full respect for the human person, but it must also be concerned for the world around us and “take into account the nature of each being and of its mutual connection in an ordered system”. Accordingly, our human ability to transform reality must proceed in line with God’s original gift of all that is.

The moral dimension of sustainability and social responsibility walks hand-in-hand with prudential concerns (see Laudato Si goals graphic below). Seventh Generation Interfaith Coalition for Responsible Investment (SGI), executive director, Christopher Cox, has described this phenomenon as systemic stewardship. The concept is that organizations may be responsible for contributing to larger externalities that over time have a direct impact on broader portfolio value despite producing returns as individual investments. This imbalance necessitates engagement by investors to either limit or curb the externalities in the interest of preserving value of their broader portfolio investments. An example would be companies that produce high levels of carbon emissions that contribute to climate change, which drive up the cost of insurance, inputs, or generate physical damage impacts from more prevalent and intensive hurricanes or wildfires.

Engagement with companies through dialogue, shareholder resolutions, proxy voting, and other actions is the primary mechanism to drive change in corporations. In today’s world this has become a core activity and competency among investors, as well as mission-based organizations, and requires training for a generation of business and finance students both from the point of view of the company as well as the investors.

The Marquette Laudato Si Student Shareholder Engagement Program

This program is modeled after the Dwight Hall program at Yale, which operates in partnership with the Interfaith Center on Corporate Responsibility (ICCR). ICCR’s sister organization, SGI, is headquartered in Milwaukee and not far from Marquette’s campus. SGI represents 35 faith-based organizations across the Midwest. SGI each year organizes a series of corporate engagements.

In partnership with SGI, the program provides students direct learning experience on shareholder resolutions, proxy voting, annual meetings, and in-person/virtual meetings with board of directors and corporate managers on matters regarding corporate social responsibility and sustainability. Each year SGI runs a corporate calendar of activities, around which students have the opportunity to develop class projects.

Class projects are offered through the following courses: Corporate Finance and Sustainable Finance. In addition, students may participate in extracurricular activities as part of the Marquette Investment Club.

Partnership with the Marquette Endowment

Students have the opportunity to invest directly in the companies with which they engage thanks to funds made available from the Marquette Endowment. In addition to the experiences of investment and engagement, students have further opportunity to gain experience from reporting on their projects to the investment committee of the Marquette endowment, which undertakes its own shareholder engagement initiatives in conjunction with the Jesuits. Students prepare presentations and meet with members of the investment committee.

For further information about the Marquette Laudato Si Shareholder Engagement program please contact:

Christopher K. Merker, CFA, Ph.D.

Executive-in-Residence, Co-Director

Marquette S-Lab

christopher.merker@marquette.edu