In Prof. Lisa M. Fairfax’s trailblazing course, students unpack the history of the ESG movement—and prepare to chart its future.
In recent decades, conversations around Environmental, Social, and Governance (ESG) initiatives have taken both news headlines and corporate boardrooms by storm.
In Presidential Professor Lisa M. Fairfax’s course “ESG: Environmental, Social, and Governance Initiatives,” students delve deep into the study of ESG with a curriculum that bridges the movement’s history with the rapidly evolving societal, political, and business landscapes in which it exists.
Fairfax is also Co-Director of the Institute for Law & Economics (ILE).
What is ESG?
Many scholars have noted that “ESG” is exceedingly difficult to define precisely.
One way to think about ESG is as a collection of factors that shareholders and boards of directors are increasingly considering when making investment decisions. For example, a corporation may consider investing in renewable energy as a way to drive “Environmental” priorities, investing in organizations that support racial equity as a way to drive “Social” priorities, or investing in organizations with ethical executive guidelines to drive “Governance” priorities.
Fairfax is one of several University of Pennsylvania Carey Law School faculty studying ESG and contributing to its definition. In her course, Fairfax assigns Professor of Law and ILE Co-Director Elizabeth Pollman’s “The Making and Meaning of ESG,” which unpacks the history, contemporary use, and potential future implications of the ESG movement. Jill E. Fisch, Saul A. Fox Distinguished Professor of Business Law and ILE Co-Director, regularly publishes scholarship on ESG and is an esteemed voice in the rapidly emerging legal area.
About the Course
Unlike other ESG courses that operate through case studies, Fairfax’s course is organized in a way that invites students to delve deeply into each of the three categories represented in the ESG movement. The class examines each prong—Environmental, Social, and Governance—in turn, beginning first with Governance.
Fairfax, whose research has historically centered on board duties and shareholder power, approaches the course through the lens of shareholders using ESG to advance the principles they value. Because what shareholders value is an elusive and constantly evolving question, some of the reading Fairfax assigns for the course comes from contemporary news. During the semester, the class practices analyzing proxy season reviews to understand what issues are currently capturing shareholders’ attention in each category.
“The careers associated with ESG haven’t even been created yet,” Fairfax said. “You’re not going to know what’s happening with ESG until you get out there, because it’s changing so, so rapidly.”
In addition to discussing the contents of each category, Fairfax also aims to equip students with higher-level understandings of the movement. In the course, Fairfax unpacks the origins of ESG, the powerful intentions behind the movement’s inception, the role that shareholders have played in the movement, and the ways in which corporations can be held accountable for the ESG goals they set.
“Whatever side of the ideological spectrum they are on, I want students to think more deeply and more critically about: What does this mean for the corporation? For the shareholders? For the market? For the country?” Fairfax said. “There are a host of different questions that ESG raises that I want to get students thinking about, and this is why I go deep into these topics.”
Training Tomorrow’s ESG Leaders
Fairfax hopes that students who take her course walk away more prepared for their future roles advising boards, drafting documents, and litigating in the quickly evolving ESG space.
“Boards are being asked to oversee a lot, and companies are being asked to respond to a lot,” Fairfax said. “So we have to train the next generation of lawyers and give them the tools to be able to help these boards, shareholders, companies, and regulators as they think through what the ESG landscape could and should look like.”
Many have pointed to the impact that Millennials and Gen Z are having on how the corporate world defines shareholder value. For Fairfax, one of the most exciting aspects of teaching an ESG course is recognizing the power her students will have to move the needle on the incredibly important issues encompassed within ESG.
“What people are saying, true or not, is that this generation more than any other generation really values values,” Fairfax said. “I’m teaching them, but I’m also learning from this generation of students, for whom I think this stuff matters in a much different way than it did even a decade ago or five years ago.”
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