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Michael Penner, a Canadian business executive and Scotiabank board member, poses for a portrait in the public space at the University of Montreal on June 18. Penner is making a donation to the school to set up a research institute for Environmental, Social and Governance (ESG) issues.Andrej Ivanov/The Globe and Mail

The University of Montreal is creating a new multidisciplinary research hub to study a broad range of environmental, social and governance issues with donations from Canadian private-equity executive Michael Penner and the Bank of Nova Scotia.

The university is announcing Monday that it will establish the Michael D. Penner Institute for ESG Issues. The institute aims to draw expertise from a wide array of academic disciplines to study pressing challenges for the business sector, and bring academic rigour to an increasingly fierce debate about companies’ responsibilities to act on issues such as climate change and diversity.

The institute will be funded at the outset by a foundational gift from Mr. Penner, a Canadian private-equity executive who is chairman of Partners Group (Canada) and operating partner at Swiss-based Partners Group AG. A former chair of the board of Hydro-Québec, he is also currently a director at Bank of Nova Scotia.

An advisory committee led by two high-powered Canadian executives will steer the institute: Charles Emond, the chief executive of the Caisse de dépôt et placement du Québec, and Laurentian Bank CEO Rania Llewellyn will be co-chairs. And Isabelle Martin, a professor in U of M’s School of Industrial Relations, will lead the institute.

Scotiabank is donating an additional $1.5-million to create the Sustainable Development Innovation Observatory within the Penner Institute, to spur research and training on innovations in sustainable development.

Neither Mr. Penner nor the university would disclose the amount of his donation, though he described it as significant enough to establish the institute and ensure its viability over the near and medium term. The university will look to raise more donations, and has had expressions of interest from individuals and institutions, he said.

Carlson: Tying executive compensation to ESG metrics is pointless and ridiculous

The burgeoning field of ESG has spawned a growing number of experts, standard-setting bodies and alliances, but also devoted critics. Advocates of ESG have framed it as an existential challenge for businesses as well as a moral imperative, while detractors have dismissed it as activist overreach and a distraction from a traditional focus on shareholders that has helped companies create new wealth.

To date, the rush to address ESG has been “a bit of a Wild West,” Mr. Penner said in an interview. “Everybody was a self-professed expert.”

In that context, he said there is a pressing need for more thoughtful, thorough and reliable information to underpin debates between ESG’s advocates and its naysayers.

“At this juncture, at this crossroads we’re at, it’s more important than ever to first of all have the thought leadership that a university can bring, and the academic rigour,” he said. “ESG, if it’s not handled properly, risks being characterized as wokeism or as a distraction to running the business, and that’s a very serious risk.”

Researchers at the institute will delve into issues such as the climate transition, labour, corruption, human rights and the treatment of Indigenous communities. And they will be drawn from across disciplines that include law, business, engineering, industrial relations, philosophy, sociology, mathematics, artificial intelligence, political science and economics.

“I think ESG needs to start becoming a reflex within organizations, where every thought process is intuitive,” Mr. Penner said.

Mr. Penner said he chose the University of Montreal because, after sitting down with rector Daniel Jutras, he concluded the U of M had the right ecosystem of academic talent to conduct the research and amplify its conclusions. By basing that work in Quebec, he hopes to help build bridges between the province’s business community and the rest of Canada.

“The university community is well equipped to decompartmentalize and disseminate knowledge,” Mr. Jutras said in a statement. Researchers who will be involved from the university, its HEC Montréal business school and Polytechnique Montréal engineering school “have the expertise to develop it into a far-reaching interdisciplinary project.”

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