George Serafeim is the Charles M. Williams Professor of Business Administration at Harvard Business School. He has taught courses in the MBA, executive education and doctoral programs, and is currently teaching the elective course “Reimagining Capitalism: Business and Big Problems” in the MBA curriculum, which received the Ideas Worth Teaching Award from the Aspen Institute and the Grand Page Prize. He has presented his research in over 60 countries around the world, including to world leaders in government and business at events such as the World Economic Forum at Davos and the Aspen Ideas Festival. He ranks among the top 10 most popular authors out of over 12,000 business authors on the Social Science Research Network.
Professor Serafeim’s research focuses on measuring, driving and communicating corporate performance and social impact. His work is widely cited and has been published in the most prestigious academic and practitioner journals, such as Management Science, The Accounting Review, Strategic Management Journal, Journal of Accounting and Economics, Journal of Finance, Organization Science, Journal of Accounting Research, and Harvard Business Review. His research is regularly cited in the media, including The New York Times, Bloomberg, Financial Times, The Wall Street Journal, Economist, BBC, Le Monde, Washington Post, and NPR. He has received multiple awards and recognitions, including the Pericles Leadership Award in recognition of services to the Hellenic Republic and the Kim B. Clark Fellowship on Responsible Leadership at Oxford University, for his research on corporate sustainability and the integration of environmental, social and governance (ESG) issues in investing. He has been recognized by Barron's as “one of the most influential people in ESG investing” and according to the Financial Times, his research was a turning point for companies and investment managers in integrating ESG issues in business and investment strategies.
Professor Serafeim has held several positions of leadership. He is the co-founder of KKS Advisors, focusing on integrating material sustainability issues in business strategy and investment decisions, and a partner at State Street Associates conducting research and developing practical solutions for market participants. He serves on the steering committee of the Athens Stock Exchange and as the Chairman of Greece’s Corporate Governance Council. Moreover, he has extensive experience in the investment management industry serving on the advisory board of investment firms in the US, Europe and Asia, that focus on ESG issues as catalysts for value creation. He has served on several not-for-profit organizations including the board of directors of the High Meadows Institute, the working group of the Coalition for Inclusive Capitalism, and the Standards Council of the Sustainability Accounting Standards Board.
Professor Serafeim earned his doctorate in business administration at Harvard Business School, where his dissertation was recognized with the Wyss Award for excellence in doctoral research. He received a master's degree in accounting and finance from the London School of Economics and Political Science, where he was awarded the Emeritus Professors’ Prize for best academic performance. He grew up in Athens, Greece.
The coronavirus pandemic caused a sharp market decline while raising heterogeneous responses across companies related to their employees, supply chain and, repurposing of operations to provide needed products and services. We study whether during the 2020 COVID-19 induced market crash, investors differentiated across companies based on their human capital, supply chain, and products and service response. Using data derived from natural language processing applied to news coverage of corporate responses to the coronavirus crisis for 3,078 companies around the world, we find that more positive sentiment around a company’s response is associated with less negative returns. This is especially true for companies with more salient responses, in industries with tasks that entail more manual routine labor and most negatively impacted by COVID-19 lockdowns, and in countries where companies focus more on customer satisfaction and use digital technologies in their operations.
Professor Serafeim leads the Impact Weighted Accounts Initiative. For the research we are conducting on product, employment and environmental impact please see here.
Professor George Serafeim explores performance, purpose, and ESG (environmental, social, and governance) issues and how they can meet the challenges of growing income inequality and environmental damage in this Kim B Clark Fellowship Talk, a series on responsible leadership.
What can be done to address problems with ESG data?
As the ESG finance field and the use of ESG data in investment decision‐making continue to grow we shed light on several important aspects of ESG measurement and data.
The sheer variety, and inconsistency, of the data and measures, and of how companies report them. Listing more than 20 different ways companies report their employee health and safety data, the authors show how such inconsistencies lead to significantly different results when looking at the same group of companies.
‘Benchmarking,’ or how data providers define companies' peer groups, can be crucial in determining the performance ranking of a company. The lack of transparency among data providers about peer group components and observed ranges for ESG metrics creates market‐wide inconsistencies and undermines their reliability.
The differences in the imputation methods used by ESG researchers and analysts to deal with vast ‘data gaps’ that span ranges of companies and time periods for different ESG metrics can cause large ‘disagreements’ among the providers, with different gap‐filling approaches leading to big discrepancies.
The disagreements among ESG data providers are not only large, but actually increase with the quantity of publicly available information. Citing a recent study showing that companies that provide more ESG disclosure tend to have more variation in their ESG ratings, the authors interpret this finding as clear evidence of the need for ‘a clearer understanding of what different ESG metrics might tell us and how they might best be institutionalized for assessing corporate performance.’
Over the past few years, there has been a significant increase in the number of initiatives seeking to mobilize investor voice towards positive social impact. This paper, provides a framework outlining the role of investors as stewards of the commons. Common ownership of competitors within industries and long-time horizons in ownership of shares are key characteristics for investors that could act as stewards of the commons, such as index funds. Social pressure fueled by small socially responsible investment funds and non-profit organizations and customer pressure from individual investors are critical in mitigating free-rider problems among asset managers and sustaining engagement practices.
What is corporate purpose? Does it matter for financial performance? How do you develop one? New research documents that most organizations are struggling to diffuse a sense of purpose throughout the organization. Those that can, enjoy better financial performance.
Using data on approximately 500,000 employees we find that our measure of purpose is not related to financial performance. We document that firms exhibiting both high purpose and clarity have systematically higher future accounting and stock market performance, even after controlling for current performance, and that this relation is driven by the perceptions of middle management and professional staff rather than senior executives.
For the past 10 years we’ve studied white-collar crime and explored how companies can create an environment that discourages it. We used data from individual companies and from surveys by PwC, Transparency International, the World Bank, executive recruiting firms, and other organizations. All told we looked at data on thousands of organizations and individuals. In addition, we interviewed more than 50 senior and middle managers at 10 organizations that had experienced scandals. And in our research we’ve found time and again that while compliance systems are important, leadership plays a critical role in shaping an organization’s attitudes toward preventing crime and its responses when wrongdoing is detected. Yet all too often, executives abdicate responsibility.
How do we ensure that everyone in society benefits from economic growth? How do we narrow income disparities between the topmost earners and everyone else, such that we create wealth for more people? Some CEOs suggest that our focus needs to shift to long-termism and a more socially focused view of capitalism’s broad objectives. If inclusive capitalism at its core means bringing society and business together, what are the strategies to get us there? At the Aspen Ideas Festival, Professor Serafeim participated in an exciting panel seeking to provide answers to those questions.
Moreover, in a recent Harvard Business Review article Professor Serafeim and co-authors outline a roadmap for companies and investors that seek to create inclusive growth. The four principles are: 1. Search for systemic, multisector opportunities to connect local entities into a new value-creating ecosystem 2. Mobilize intermediaries and NGOs as complementary partners 3. Partner with external funders for seed and scale-up financing 4. Implement a measurement and governance system for the new ecosystem
Competing With Integrity and Fighting Corruption
Why and How Companies Can Compete While Avoiding Corruption
In this line of research Professor Serafeim has documented that corruption and bribery bring fewer business benefits than conventional wisdom would suggest, while generating significant costs both at the personal leader and at the business level.
For example, using data on hundreds of companies around the world, a clear picture emerges suggesting that after detection organizations bear significant costs through tarnished reputations, damaged regulatory and business relations, and lower employee morale.
How Companies Can Integrate Sustainability to their Core and Why Investors Should Care
By now most companies have sustainability programs. But a mishmash of sustainability tactics does not add up to a sustainable strategy. To endure, a strategy must address the interests of all stakeholders: investors, employees, customers, and society at large.
Professor's Serafeim reseach has shown the value implications of integrating sustainability in a company's strategy and operations, and what are the distinguishing organizational processes that sustainable organizations have. His work on the financial materiality of sustainability investments was the first one to demonstrate the path to financial value. Relatedly, in his work he has outlined a process that can be used to execute a sustainable strategy and extend the boundaries of The Performance Frontier, and how to implement a strategy to achieve organizational change.
In his line of work on sustainable investing he has documented a market interest in nonfinancial information, how sell-side analysts have shifted their perceptions about the value of sustainability, and how firms with better ESG performance have better access to finance.
How Companies Communicate their Sustainability Efforts and What are the Consequences
An increasing number of companies issue sustainability or integrated reports. It is estimated that now more than 7,000 companies do so. In addition, an increasing number of countries now mandate reporting of ESG information.
