Document summary
Investors are increasingly using governance data points to flag risk indicators that may impact performance. Poor governance can lead to ineffective strategic decisions, weak culture, and ineffective management which can ultimately lead to increased environmental and social risks.
For investors such risks can destroy the value of a business irrespective of the attractiveness or price of its assets or its level of market share. This report suggests that improving governance can help companies outperform in both Europe and the US, and as large asset owners and investment managers are increasingly moving towards much longer time horizons, governance can increasingly be viewed as an overlay that can be useful in spotting factors that may impact risk, performance and profitability over the longer term.