Bonds are typically considered inferior in the capital structure compared to equities, meaning bondholders are paid after senior debt but before equity holders in the event of a liquidation. (ESGTextBook[PallasCatFin], Chapter 8, Page 451)

Japan'sCorporate Governance Code(updated in 2021) requiresat least two independent non-executive directorson corporate boards. This reflects efforts to enhanceboard independence and investor protection, especially in companies withhistorically high insider control.
By contrast,UK and South Africangovernance codesrecommendboard independence but do not mandate a specific number.
References:
* Japan Corporate Governance Code (Financial Services Agency, 2021)
* UK Corporate Governance Code (FRC)
* King IV Report on Corporate Governance (South Africa)

Double materialitymeans a company must reportnot only how ESG risks impact financial performancebut alsohow the company's activities impact society and the environment.
For example, under theEU Corporate Sustainability Reporting Directive (CSRD), companies must disclose:
* Financial materiality(how ESG issues affect financial performance)
* Impact materiality(how the company affects the environment and society) References:
* European Commission'sCSRD & Double Materiality Framework
* Global Reporting Initiative (GRI) Standards
* Principles for Responsible Investment (PRI) ESG Reporting Guidelines
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The concept of double-agency in society refers to the conflict of interest between money managers and asset owners. This concept arises when there are two levels of agency relationships, each with potential conflicts of interest.
* Principal-Agent Relationship: In the first level, asset owners (principals) delegate the management of
* their assets to money managers (agents). The money managers are expected to act in the best interests of the asset owners, but their own interests might not always align with those of the asset owners.
* Secondary Agency: The second level involves the relationship between the corporate CEOs (agents) and the company's shareholders (principals). Here, the CEOs are supposed to act in the best interests of the shareholders, but again, there might be conflicts of interest.
* Double-Agency Conflict: The double-agency conflict occurs because the money managers, who are agents of the asset owners, also act as principals when dealing with corporate CEOs. This dual role can lead to conflicts where the money managers' decisions may benefit themselves or the CEOs rather than the asset owners.
References:
* MSCI ESG Ratings Methodology (2022) - Explains the principal-agent relationships and how conflicts of interest can arise at multiple levels, leading to the double-agency problem.
* ESG-Ratings-Methodology-Exec-Summary (2022) - Discusses the importance of aligning interests between asset owners, money managers, and corporate executives to mitigate the double-agency issue.

Step 1: Context of the Financial Crisis of 2008
The financial crisis of 2008, also known as the Global Financial Crisis (GFC), led to significant legislative and regulatory changes aimed at preventing a similar crisis in the future.
Step 2: Legislative Responses
The Cadbury Code: A set of guidelines for corporate governance in the UK, established in the early 1990s, long before the 2008 crisis.
The Dodd-Frank Act: Enacted in 2010 in response to the 2008 financial crisis, this comprehensive piece of legislation aimed to increase transparency in the financial system, reduce risks, and protect consumers.
The Greenbury Report: Focused on executive remuneration in the UK and was published in 1995.
Step 3: Verification with ESG Investing Reference
The Dodd-Frank Wall Street Reform and Consumer Protection Act was directly a result of the 2008 financial crisis, aimed at preventing future financial system collapses by implementing stricter regulations and oversight: "The Dodd-Frank Act introduced significant changes in financial regulation to prevent the recurrence of the risky behaviors that led to the 2008 crisis".
Conclusion: The financial crisis of 2008 led to the enactment of the Dodd-Frank Act.