Professor Vikramaditya Khanna has authored the latest edition of the NSE Quarterly Briefing titled “Global Asset Managers and the Rise of Long Term Sustainable Value”. The executive summary is as follows:
– The largest global asset managers (e.g., BlackRock, State Street) have stated that long term sustainable value (LTSV) is their key goal with respect to the firms in which they invest.
– LTSV is about both economic performance and societal impact making it appear somewhat broader than traditional conceptions of shareholder primacy.
– Given the large amount of assets under management with these firms, their views on corporate purpose are likely to have significant effects on firms around the world, regardless of what the underlying legal regime may require.
– LTSV focuses board attention on enhancing strategic discussions for long term economic and societal effects, regular engagement with investors on these issues evincing a desire for a more collaborative framework, and a focus on risk management, amongst others.
– Indian Corporates may wish to consider how these developments are likely to influence their attempts to raise capital along with considering some steps suggested in this briefing to navigate this terrain.