Module 3 · Corporate Issuers

Corporate Governance: Conflicts, Mechanisms, Risks & Benefits

EN: Governance mechanisms, ESG factors, and the consequences of weak governance.
VN: Cơ chế quản trị, ESG, hậu quả của quản trị yếu.

1. Governance Mechanisms Concept

Board structure

Indep. directors Reduces management dominance.
Sep. CEO/Chair Best practice — non-executive chair.
Committees Audit, compensation, nominating — should be independent-led.
Voting One-share-one-vote vs dual-class shares.
Comp align. Stock-based pay, claw-back provisions.

2. ESG Factors Concept

E Environmental — carbon footprint, resource use, pollution.
S Social — labor practices, product safety, community.
G Governance — board, exec pay, audit, shareholder rights.

3. ESG Investing Approaches Concept

Negative screening Exclude sin stocks (tobacco, weapons).
Positive screening Best-in-class within sector.
Thematic Climate, water, gender.
Engagement Active dialog/voting to push change.
Impact Direct measurable social/environmental outcomes.

Practice problem Practice

Practice problem

An ESG manager refuses to invest in any tobacco or weapons company. Which screening approach?

Show solution

Negative screening = exclude entire categories.

Positive = best-in-class within sector.

Thematic = invest based on themes (climate).

Negative (exclusionary) screening