August 28, 2020

New CIO Special: The “G” in ESG: Governance – a question of balance

Coronavirus and its economic impact have put a renewed focus on corporate governance – the subject of the latest special report by Deutsche Bank’s International Private Bank on Environmental, Social and Governance (ESG) themes.

The report argues that:

  • Governance is a source of corporate resilience. During the pandemic, good governance has allowed firms not only to maintain basic functions, such as cash flow and fulfilling contractual obligations, but has also helped them to keep their workforce and customers safe.
  • The scope of governance will widen further in future. The socio-economic effects of this crisis, including the growing involvement of governments in many areas, will put new demands on corporate governance. Environmental aspects are also likely to stay prominent.
  • Future governance changes will require a sense of balance. In a constantly changing environment, new approaches will need to evolve to address a range of concerns in a financially sustainable way that balances the needs of individuals, governments, corporates and investors.

The report provides an overview of governance components and studies their impact on firms’ performance. It also includes a brief history of corporate governance and a guest contribution on governance in German family-owned firms. This is the third in a series of reports on ESG investing, complementing previous reports on its environmental (“E”) and social (“S”) components.