The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Thu, 23 Jul 2026 11:32:28 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png A New Way of Seeing Value – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 A New Way of Seeing Value https://corpgov.law.harvard.edu/2021/09/24/a-new-way-of-seeing-value/?utm_source=rss&utm_medium=rss&utm_campaign=a-new-way-of-seeing-value https://corpgov.law.harvard.edu/2021/09/24/a-new-way-of-seeing-value/#comments Fri, 24 Sep 2021 13:15:05 +0000 https://corpgov.law.harvard.edu/?p=140530?d=20210927145523EDT Posted by Witold Henisz (The Wharton School of the University of Pennsylvania), on Friday, September 24, 2021
Editor's Note:

Witold Henisz is the Deloitte & Touche Professor of Management (in Honor of Russell E. Palmer, former Managing Director) at The Wharton School of the University of Pennsylvania. This post is based on his Engine No. 1 memorandum. Related research from the Program on Corporate Governance includes The Illusory Promise of Stakeholder Governance by Lucian A. Bebchuk and Roberto Tallarita (discussed on the Forum here); Companies Should Maximize Shareholder Welfare Not Market Value by Oliver Hart and Luigi Zingales (discussed on the Forum here); and Reconciling Fiduciary Duty and Social Conscience: The Law and Economics of ESG Investing by a Trustee by Max M. Schanzenbach and Robert H. Sitkoff (discussed on the Forum here).

Engine No. 1’s Total Value Framework is a data-driven approach to investing that puts a tangible value on a company’s environmental, social and governance impacts and ties those impacts to long-term value creation.

Interest in environmental, social and governance (ESG) has never been greater, and yet, ESG ratings systems conflict with one another and remain uncorrelated from financial returns. The inability to tie data to actual outcomes has supported shareholders divesting rather than holding a company and engaging when a problem arises.

For the first time, the Total Value Framework measures, in dollars and cents, the material negative and positive impacts a company has and demonstrates how a company’s performance and value can be enhanced by the investments it makes in its employees, customers, communities, and the environment.

At Engine No. 1, we believe there is no tradeoff between impact and returns. The Total Value Framework is an important step forward for CEOs, board members, and investors to include impact analysis in long-term decision making to drive better economic results.

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