---
id: "pisquared:interview/witold-henisz"
type: "Pi-Squared interview"
title: "Anita McGahan in conversation with Witold J. Henisz"
url: "https://pisquared.theburnescenter.org/interviews/witold-henisz"
date: "2024-08-26"
people: ["Anita McGahan","Witold J. Henisz"]
summary: "Witold J. Henisz is the Vice Dean and Faculty Director of the ESG Initiative, and the Deloitte & Touche Professor of Management at The Wharton School, The..."
recording: "https://vimeo.com/1007828320"
source: "Pi-Squared (pisquared.theburnescenter.org), The Burnes Center for Social Change"
licence: "none stated"
---

# Anita McGahan in conversation with Witold J. Henisz

Witold J. Henisz, Vice Dean and Faculty Director of the ESG Initiative, and the Deloitte & Touche Professor of Management, at the University of Pennsylvania's Wharton School · 26 August 2024

## About the guest

Witold J. Henisz is the Vice Dean and Faculty Director of the ESG Initiative, and the Deloitte & Touche Professor of Management at The Wharton School, The University of Pennsylvania. He received his Ph.D. in Business and Public Policy from the Haas School of Business at University of California, Berkeley and previously received a M.A. in International Relations from the Johns Hopkins School of Advanced International Studies. His research examines political hazards as well as environmental, social and governance influences on global corporations. His research has been published in top-ranked journals in international business, management, international studies and sociology.

## Reflections from the interview

Witold began by answering Anita’s question about why ESG and Corporate Social Responsibility are so controversial given that environmental, social and governance goals seem to be so straightforward as business objectives. Vit responded by pointing to three types of responses in the business community to these initiatives:

 1. The achievements of the ESG movement on measuring and holding companies accountable provoked a backlash in some corners because the accountability was perceived as a threat. The ESG countermovement sought to discredit ESG because of the success it was having in the first place.
 2. The progressive left was making a claim that regulation should be enacted to enforce ESG. This led to a response in the financial community – the investment community – along the lines of “please don’t regulate us as we’ve got a system for measuring ESG and can self regulate.” So part of the anti-ESG movement is a really an anti-regulation movement.
 3. The ESG advocates are stuck. The attacks from the right say that ESG is interference with capitalism. The attacks from the left say that what companies are doing – and what the financial investment community measures – is not enough.

Vit gave the example of Engine #1, which he described as working on better measurement of ESG outcomes by firms. Engine #1’s early success was an intervention at ExxonMobil to replace several board members. But now Engine #1 is falling victim to the criticisms on both the right and the left that Vit described. It’s very hard to work within the system to get the kind of change we need to make progress.

Anita asked Vit to expand on his ideas about measurement. She specifically wondered whether measurement alone is enough, or whether we need conceptual development on what the “S” in ESG means. Vit discussed how the current approaches to ESG measurement are falling through in part because of their inconsistency and the lack of commensurateness of many ESG goals. He described this as the “adding up” problem. How do we combine achievements within the ESG space? How much weight goes to each type of accomplishment? The ESG measurement community has not yet matured to the same point as, say, the bond-rating agencies. The correlation between bond ratings by different agencies is something like 0.95, whereas the correlation between ESG measurers is something like 0.20. There’s too much disagreement. Imagine that someone asked you to cough up a list of the 100 best-managed companies on ESG criteria. It would be hard to generate this list!

Anita asked Vit about the limits of measurement when some facets of ESG are categorically important. For example, how do you measure the value of someone’s life in making an investment in healthcare? Vit responded by saying that, while there are surely limits, right now there’s a lot of bad decision-making on known implications of various types of investments. He said he was thinking about the ways in which resource allocation decisions could be made better to account for a full range of their consequences, and gave the example of Morocco’s Nor solar farm, which uses a greater amount of water than was initially anticipated with the farm was built. The problems arising from that mistake could have been anticipated through better measurement of the value of water vs. power. Same thing for the Mozambique gas fields…

Vit described his appreciation for the difficulty of making tradeoffs through monetizing various types of value, but said that, nonetheless, there was a lot of headroom for making better decisions through monetization. Anita tried to push him gently on the “pricelessness” of some things, and ultimately the two came to agreement on the importance of a foundation based on human rights, the value of life, and other core imperatives that could not be violated. But above that bar, we do need to move forward on ESG measurements that stick, and Vit sees a lot of promise in monetization to make that happen.

Anita then asked Vit for his advice to students at Wharton who are passionate about ESG and corporate social responsibility. Vit’s advice: Go for the best jobs – the most powerful positions – in Finance, Marketing, Operations, Strategy, and so on… But do it with an ESG lens. Take the major in ESG if you like, or even load up on a few ESG courses. Tool up on the important value-creation opportunities in ESG and then go put them to work in a top job. This is the agenda for this century. 

Vit got the last word: It’s helpful to have a set of principles that you rely on as a businessperson. Vit talked about the importance of analyzing any business initiative for all the stakeholders who will be affected. He encourages us think about all the value that is engaged, and then to steer businesses toward high-value projects where investors can win under a corporate form of organizing action.

## Related resources

- [Vit’s Research Profile at Wharton](https://mgmt.wharton.upenn.edu/profile/henisz/)
- [ESG Initiative at Wharton](https://esg.wharton.upenn.edu/about/)
- [Vit’s Profile in the Knowledge at Wharton Newsletter](https://knowledge.wharton.upenn.edu/faculty/witold-henisz/)
- [Vit’s Highly Cited Paper on Economic Growth](https://onlinelibrary.wiley.com/doi/abs/10.1111/1468-0343.00066)
- [Vit’s Book on Corporate Diplomacy](https://www.taylorfrancis.com/books/mono/10.4324/9781351287883/corporate-diplomacy-witold-henisz)

## Recording

Video: https://vimeo.com/1007828320

## Category

[Excellence](https://pisquared.theburnescenter.org/category/excellence)

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Original page: https://pisquared.theburnescenter.org/interviews/witold-henisz · Licence: none stated