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On July 1, 2026, the Arison Center for ESG at Reichman University hosted a panel at the Herzliya Conference examining the role of Israel’s business sector in safeguarding democratic resilience. The panel was moderated by Prof. Nir Hashai, Chair of the Arison Center for ESG and Dean of the Arison School of Business, with the participation of Chemi Peres, Co-Founder of Pitango Venture Capital and Chairman of the Peres Center for Peace and Innovation, and Sami Peretz, a journalist at TheMarker and Haaretz. The discussion focused on whether corporate involvement in public and democratic issues, such as the judicial reform, falls outside the traditional role of business or should instead be understood as part of corporate responsibility. While companies are primarily expected to create economic value, employ workers, provide goods and services, and generate returns for shareholders, their ability to do so depends on functioning institutions, the rule of law, regulatory certainty, public trust, and an independent judicial system. Democracy as Economic Infrastructure A central theme of the panel was that democracy is not only a social or moral value but also an important economic foundation. Comparative data from the World Justice Project and other studies indicate an association between effective checks on government power, lower levels of perceived corruption, and higher standards of living. Strong institutions allow companies to assess risks, attract capital and investors, and plan for the long term. The panel nevertheless highlighted the limits of corporate political power. During the judicial reform period, parts of the business sector considered stronger forms of protest, but many companies remained dependent on government regulation, licensing, tenders, and ongoing relationships with public authorities. Companies must also take into account that their employees may hold very different political views, making the use of corporate power for political purposes particularly complicated. The Israeli High-Tech Paradox The discussion emphasized the growing influence of major corporations and the broader responsibilities that may accompany that influence. This is particularly relevant to Israel’s high-tech sector, which contributes substantially to exports, GDP, and tax revenues. Paradoxically, high-tech companies, which are among the most internationally mobile businesses and can more easily relocate capital or operations abroad, were also among the most publicly involved in opposition to the judicial reform. More locally dependent industries often acted more cautiously because of their reliance on Israeli regulators and government institutions. This difference does not necessarily reflect different levels of commitment to democracy. Rather, it illustrates different economic incentives and dependencies. International companies face expectations from global investors, employees, and customers, while domestic companies may be more concerned about the consequences of confronting political decision-makers or regulators. What Can the Business Sector Actually Do? The panel also considered the practical tools available to the business sector in times of democratic crisis. Although Israeli businesses control significant financial resources and support major social initiatives, their ability to directly block government policy remains limited. More extreme measures, such as economic shutdowns, withholding taxes, or moving capital abroad, raise significant legal and ethical concerns. The discussion therefore highlighted a fundamental tension: efforts to defend democracy risk losing legitimacy if they themselves violate the rule of law, while relying exclusively on existing institutional mechanisms may become increasingly difficult when those institutions are themselves under pressure. From Corporate Governance to Democratic Resilience The panel’s conclusions also broadened the meaning of the “G” in ESG. Corporate governance is usually understood as relating to internal corporate structures,boards of directors, shareholder meetings, compliance, oversight, and executive responsibility. Yet companies cannot maintain sound governance over time within an unstable institutional environment. Judicial independence, an effective public service, anti-corruption mechanisms, freedom of the press, and the ability of citizens and civil society organizations to scrutinize government all influence corporate risk management. Democratic resilience should therefore be viewed not as separate from ESG, but as part of the institutional environment on which sustainable business activity depends. The conclusion was not that corporations should become political organizations or replace elected officials. Rather, businesses should recognize their dependence on strong democratic institutions and consider how their decisions and public engagement may affect the conditions that allow them, and the broader economy, to operate, invest, and grow over the long term. To read the full article, visit our website in Hebrew.

In a labor market grappling with a talent shortage and a growing need for diverse modes of thinking, creativity, and problem-solving, businesses can no longer afford to overlook a population of significant professional potential: neurodiverse individuals. Yet this population struggles to enter the workforce. Integrating neurodiverse employees is not merely a social or ethical question, but a genuine test of corporate responsibility and of sound human-capital management — at both the organizational and national levels. What Is Neurodiversity — and Why Does It Matter to Organizations? Neurodiversity describes the natural variation in how people think, learn, process information, express themselves, and interact with their surroundings. It is not a marginal phenomenon: it includes people on the autism spectrum, people with ADHD, and others with distinctive neurological profiles. Because neurological difference is often invisible — unlike a physical disability, which is recognized immediately and almost intuitively prompts accommodation — the difficulties and needs it entails may go unrecognized, or even be misread. Yet alongside traits that certain medical models define as disorders, it also brings distinctive strengths: attention to detail and to change, pattern recognition, systematic thinking, and the capacity to process information at scale. The term "difference" is not entirely neutral; it reflects the perspective of the majority, whose characteristics shape social norms, education systems, and the workplace. It is precisely at the meeting point between neurotypical and neurodiverse minds that significant advantages can emerge, as different ways of thinking complement one another. Difference as Both Challenge and Strength A striking illustration is the story of Temple Grandin — an autistic scientist and academic who was among the first to describe the experience of living with autism from the inside. Her insights made an important contribution to understanding neurological difference, and to seeing how thinking differently can become a source of breakthrough professional insight. Her achievements show that traits sometimes perceived as a source of difficulty may, in the right environment, become a source of knowledge, innovation, and unique professional contribution. And yet many neurodiverse individuals struggle to find work — not for lack of professional ability, but because of a gap between the characteristics of the work environment and their ways of thinking, communicating, and functioning. The figures are stark: in Western countries, employment among people without disabilities runs at roughly 70–80%, while among people on the autism spectrum it stands at only about 30% — a figure that captures the depth of the gap between potential and its realization. When the Barrier Is the Organization: Recruitment, Environment, and Accommodations For people with high-functioning autism (hfASD), one of the central barriers is conventional recruitment and screening. Screening processes and job interviews rely heavily on communication and social skills — eye contact, fluent conversation, and self-presentation that matches unwritten expectations. Sensory overload in an unfamiliar setting may impair concentration during the interview; difficulty with eye contact may be mistaken for a lack of confidence or interest; directness, precision, or a focus on detail may be read as rigidity or a failure to grasp the social context. The workplace itself offers no guarantee of an untroubled routine: open, noisy environments, alongside intensive verbal communication and informal social expectations, can pose significant challenges, particularly for people with hfASD. None of these characteristics necessarily bears on the ability to perform the role, yet they can overshadow an employee's professional competence, affect how they are evaluated, and thereby become a barrier to entry. The challenge, then, is not the candidate's or the employee's alone, but the organization's — and the way it defines, examines, and evaluates fit and performance over time. For organizations, this is not only a social or ethical question but a business one: how can they identify, integrate, and realize unique human potential that currently goes untapped? Successful integration does not happen on its own; it requires awareness and understanding of neurodiversity, together with a willingness on the part of organizations and employers to make the necessary accommodations. This is not about lowering the requirements of the role or favoring particular candidates, but about adapting recruitment processes, the work environment, and management practices so that employees can express their professional abilities and realize the potential within them. A notable example is Israel's "Roim Rachok" program, which works to place young people on the autism spectrum in technological and intelligence roles during their military service. By matching role requirements to participants' strengths, the program shows that adapting recruitment and the work environment can not only overcome barriers but also unlock professional potential of a high order. Between Legal Rights and Actual Implementation Israel has recognized the right of people with disabilities to equal participation in the labor market. The law prohibits discrimination in hiring, in working conditions, in promotion, and in dismissal, and requires employers to make the accommodations needed for the integration of employees with disabilities. It also seeks to promote adequate representation of people with disabilities, through representation requirements and the appointment of an officer responsible for advancing their employment. But although the legal framework in Israel is relatively broad, implementation is not always simple. The law provides that a failure to accommodate may amount to discrimination, yet it also recognizes that an employer cannot be required to make every possible accommodation. The duty to accommodate does not apply where it would impose an "unreasonable burden in the circumstances" — a concept that is not clear-cut, varying with the size of the organization, the cost of the accommodation, and the resources required. In many cases, whether a given accommodation is reasonable depends on how well the organization knows its employees' needs and on its willingness to adapt the work environment. Where neurological difference is insufficiently familiar to employers, significant gaps can open between the legislature's intent and practice — and so the integration of neurodiverse people in the Israeli labor market remains relatively limited. Israel's "Equal Employment" program is an important step in the right direction, but it cannot on its own close the gaps described here, and it deserves to be expanded. Examples from Around the World Accumulated experience shows that legislation alone is not enough, and that successful integration also depends on active organizational policy. In the United States, alongside the legal prohibition on discrimination, a practical approach has emerged that treats the integration of neurodiverse employees as a competitive advantage; organizations, chiefly in technology, finance, and data analysis, are developing dedicated programs of adapted recruitment, training, and support, out of a recognition of these employees' distinctive contribution. In the European Union, the Employment Equality Directive (2000) prohibits discrimination on the basis of disability and requires employers to make reasonable accommodations, while leaving their scope to employers' discretion; recognizing the gap between legislation and implementation, the EU has developed complementary policy. Ireland illustrates that even a comprehensive legal framework and government support are insufficient to close the employment gaps of people on the autism spectrum without broader organizational and cultural change. In Germany, employers who fail to meet the statutory employment quota pay a compensatory levy that — together with public funds — finances workplace accommodations, support services, and integration programs, creating a combined mechanism of obligation, incentive, and support. A complementary model is offered by Specialisterne, an international organization that mediates between employers and neurodiverse workers, on the premise that responsibility for integration rests with the employer as well. From Legal Recognition to Policy That Encourages Inclusion In Israel today, people with disabilities must often turn to the labor courts to contest employment discrimination — a complex, lengthy, and costly path that also requires proving discrimination, no simple task. Placing the responsibility on the injured individual alone is not enough; a broader public policy is needed, one that seeks to create structural change in the labor market. International experience suggests that meaningful integration of all segments of the population also rests on economic incentives, professional support, and conditions that encourage it. Among the measures worth considering are tax benefits for inclusive employers, grants and public recognition for companies that promote diverse hiring, and sustained professional support for employee and employer alike, alongside broadening awareness of neurodiversity and training managers in inclusion. A shift from a policy centered mainly on legal enforcement toward one that encourages employers' active participation — through economic incentives and a cost attached to persistent non-inclusion — could enable broader, more stable, and more effective integration of neurodiverse people, and others, in the labor market. Inclusion as a Measure of Corporate Responsibility In recent years, investors and stakeholders have paid growing attention to ESG and to the welfare of employees and consumers. They assess not only companies' financial performance but the way they act within the society in which they operate: whether they help narrow gaps, act fairly, and create accessible, inclusive environments. Accordingly, inclusive employment policy is becoming a central element in evaluating an organization's corporate responsibility. Openness to employing people from diverse groups, among them neurodiverse individuals, is seen as part of responsible human-capital management. Contending with discrimination claims, in Israel or abroad, can entail legal costs, management time, and financial and reputational exposure. Early investment in accommodations, in manager training, and in building an inclusive work environment can reduce these risks and contribute to a positive organizational culture. Inclusive policy is part of responsible human-capital management and of putting ESG into practice. I write in this article as a call to action. The integration of neurodiverse individuals is, to my mind, an important dimension of ESG strategy; to that end, we must broaden knowledge and awareness of neurodiversity, invest in the necessary accommodations, train managers and teams, and build adapted recruitment and employment processes. Organizations that learn to identify the strengths of neurodiversity and harness them will enrich their ways of thinking and creating, widen the circle of opportunity, and gain a real business advantage. A world that is aware of neurodiversity and inclusive of it is a richer, more just, and more successful world. Dr. Yochaved H. Schwartz is a musician, attorney, and mediator. In recent years she has worked to advance the integration of neurodiverse individuals into the labor market, with a focus on high-functioning autism, and on the relationship between employment and the labor market, organizational inclusion, and corporate responsibility. לקריאת המאמר בגרסה המלאה, בקרו באתר הבלוג בשפה העברית.

Until a few years ago, an ESG questionnaire from an international client was perceived by quite a few Israeli companies as just another bureaucratic hurdle on the way to a deal. Today, it has become a strict gateway - and in too many cases, the very reason Israeli businesses are being left out of global markets. Why Supply Chains Became the Ultimate ESG Battleground Global corporations are rapidly integrating environmental, social, and corporate governance (ESG) criteria into their procurement and supplier selection processes. Driven by evolving global regulations and corporate risk management, international clients can no longer meet their sustainability targets without tracking their suppliers' data. This shift is moving away from basic "tick-the-box" reporting toward rigid, data-driven performance assessments (such as EcoVadis ratings). Recent data from the 2026 EcoVadis Sustainable Procurement Barometer reveals that 98% of surveyed global companies have already integrated ESG metrics into their procurement processes. The Domino Effect of Global Regulation Even if an Israeli company isn't directly bound by international sustainability regulations, its global clients certainly are. Since a massive portion of a company's environmental and social footprint lies within its supply chain (Scope 3 emissions, human rights policies, and labor standards), global giants are rolling these strict demands down to their suppliers. From tech startups to traditional manufacturers, no sector is immune to this pressure. Reactive vs. Proactive Management Waiting for the next urgent tender or client questionnaire puts companies at a severe competitive disadvantage, forcing expensive, last-minute compliance rushes. Conversely, forward-thinking businesses that proactively manage their ESG data, track carbon footprints, and establish clear corporate governance can turn compliance into a powerful competitive edge, securing their position in the global market. The question is no longer if these demands will reach your doorstep, but whether you will meet them with a clear strategy or only after the opportunity has already slipped away to your competitors. To read the full article, visit our website in Hebrew.

White-collar crime is often associated with senior employees who hold access to information, resources, and decision-making power. While these tools are essential for legitimate business activity, they can also create opportunities for misuse. The harm caused by economic crime extends far beyond direct financial loss: it can undermine fair competition, weaken public trust, and damage the social and economic systems on which markets rely. Criminal law plays an important role in responding to such misconduct, but punishment alone has clear limits. White-collar offenses are often concealed, complex, and difficult to detect. Their perpetrators may underestimate the likelihood of being caught or believe they can avoid scrutiny altogether. Moreover, misconduct does not always result from a single immoral choice. It can emerge from an organizational environment that rewards financial success at any cost, normalizes small deviations from rules, or fails to challenge unethical conduct. The “fraud triangle” offers a useful way to understand these dynamics. According to this model, misconduct is more likely when three elements come together: opportunity, pressure, and rationalization. Opportunity may arise from weak oversight or concentrated power; pressure may result from financial targets or competitive workplace culture; and rationalization allows individuals to justify improper conduct as necessary, harmless, or simply part of doing business. This is where ESG can become more than a reporting framework. When implemented authentically, ESG can serve as an internal preventive mechanism that addresses these conditions before misconduct occurs. The governance component of ESG is particularly significant. Independent boards, active audit committees, clear separation of responsibilities, and effective internal controls can reduce the opportunity for managers to act without scrutiny. Protected whistleblowing channels are also essential: they enable employees to report irregularities and increase the perceived likelihood that wrongdoing will be exposed. In organizations where authority is concentrated, such mechanisms help counter the classic agency problem—the gap between the interests of managers and those of the company and its stakeholders. Yet formal oversight alone is not enough. Organizations also need an ethical culture that makes misconduct harder to justify. A code of ethics should not be a document stored in a drawer or used only after a crisis. It should be reflected in everyday decision-making, leadership behavior, employee training, and the way violations are handled. When senior management consistently demonstrates integrity, employees are less likely to see unethical conduct as normal, unavoidable, or acceptable. This distinction is crucial because ethics and criminal law operate differently. Criminal law establishes a minimum threshold: conduct below it may lead to enforcement. Ethics sets a higher standard. By encouraging employees and managers to act according to broader ethical principles, organizations create meaningful distance between ordinary business decisions and criminal wrongdoing. The third dimension concerns incentives. Many companies reward senior managers primarily for financial performance, such as growth, profitability, or market share. These incentives can unintentionally create pressure to take excessive risks or manipulate information. Linking part of executive compensation to compliance, integrity, and ethical performance can help reshape this structure. It makes misconduct costly not only because of the possible future risk of prosecution, but also because it may lead to the immediate loss of tangible rewards. The effectiveness of ESG ultimately depends on its authenticity. A company cannot credibly present itself as responsible or sustainable while its governance systems are weak, its ethical standards are ignored, or its internal culture tolerates misconduct. ESG should not serve as a public-relations exercise or a formal checklist. It should be integrated into risk management, internal oversight, employee evaluation, and organizational decision-making. Criminal enforcement remains necessary when wrongdoing occurs. However, ESG can complement enforcement by acting earlier and from within. By reducing opportunities for misconduct, challenging rationalizations, and aligning incentives with ethical behavior, ESG can help organizations build the internal resilience needed to protect not only their own interests, but also public trust and the broader economy. לקריאת המאמר המלא בקרו באתר שלנו בעברית.

The Core Risk in AI: Not the Algorithm, but Organizational Governance In recent years, artificial intelligence has become more than a driver of innovation and efficiency. It has also become a question of corporate governance. AI now affects decision-making, workplace processes, privacy, cybersecurity, customer relationships, reputation, and even fundamental rights. As a result, the key question is no longer merely which AI tools an organization adopts, but what governance framework it builds around them. In ESG terms, AI is directly linked to the Governance pillar: how organizations allocate authority, oversee risks, manage vendors, and ensure that technology is used responsibly and remains under human control. Public discussions about AI often focus on bias, transparency, ethics, and regulation. While these issues are important, they do not capture the full risk picture. In practice, organizational failures often begin much earlier: an employee entering sensitive information into an external system, a business unit deploying Generative AI without oversight, or an organization engaging an AI vendor without understanding how data is processed or used. This is where corporate governance becomes critical, not as a broad commitment to "responsible AI", but as a concrete framework of authority, oversight, accountability, and control. Regulatory initiatives such as the EU AI Act and governance frameworks such as NIST can provide guidance, but they cannot answer the internal questions every organization must address: who approves AI tools, who evaluates risks, who oversees their use, and how incidents are reported and managed. The Governance Gap: Between Policy and Implementation For many organizations, the primary challenge is not a lack of awareness about responsible AI, but the failure to translate that awareness into operational mechanisms. Policies, training materials, and statements about responsible innovation may exist, yet there is often no clear approval process, no inventory of AI use cases, no allocation of responsibilities, and no ongoing monitoring of how employees actually use AI systems. As a result, organizations may appear to be managing AI risks while in reality relying on ad hoc decisions and reactive responses. This gap between policy and implementation is the essence of ineffective AI governance. The Required Framework: Practical Solutions for Effective AI Governance Effective AI governance requires a clear organizational AI policy, a structured approval process for AI tools, and rigorous review of AI vendors. Organizations should also consider establishing a cross-functional AI governance forum that brings together legal, compliance, privacy, cybersecurity, procurement, HR, and business stakeholders. Equally important is defining the oversight role of senior management and the board of directors, ensuring that they understand the organization’s AI risk profile and governance framework. Finally, governance cannot succeed without AI literacy and employee training. Responsible AI adoption depends not only on access to technology, but also on developing the skills needed to use it critically, responsibly, and with appropriate caution. Conclusion Effective corporate governance requires continuous oversight rather than one-time approval. AI systems evolve rapidly, capabilities expand, vendors update their terms, and employees discover new use cases over time. Therefore, organizations must continuously review, monitor, and adapt their governance practices. The central challenge of the AI era is not simply regulatory compliance, but building an internal framework of control. AI governance is not an administrative layer added to innovation; it is the condition that allows innovation to flourish without losing control. An organization that adopts AI without responsibility, oversight, and accountability is not managing technology, it is gambling with it. Dr. Yuval Reinfeld, Reichman University; Co-Chair, Artificial Intelligence Committee of the Israel Bar Association; Member, National AI Experts Forum.

Climate change is no longer only an environmental or scientific concern, it has become a material business risk that directly affects public companies, investors, and capital markets. As global markets increasingly demand reliable ESG and climate-related information, many jurisdictions have moved toward mandatory and standardized sustainability reporting. Israel, however, continues to rely mainly on a general and insufficient disclosure requirement regarding environmental risks. As a result, Israeli companies often publish partial, inconsistent, and non-comparable ESG reports, leaving investors without the information needed to properly assess climate-related risks and opportunities. A comparison between Israeli companies and foreign companies reveals significant gaps in climate reporting, emissions disclosure, governance structures, and long-term commitments such as Net Zero targets. These gaps also affect international ESG ratings, access to foreign investment, and the competitiveness of the Israeli capital market. While the European Union has already adopted broad mandatory reporting and due diligence frameworks, and IFRS sustainability standards are gaining global traction, Israel remains behind. The article argues that effective change requires clear, binding reporting rules alongside meaningful enforcement. Without reliable, uniform, and comparable climate disclosure, Israeli companies and investors will continue to operate at a disadvantage in the global market. To read the full article, visit our website in Hebrew.

Imagine a typical morning at a kibbutz factory in 2026: raw materials arriving, machinery humming, and a diverse workforce commuting from the kibbutz and surrounding peripheral towns. While located inside the kibbutz, today, about 90% of the employees are not kibbutz members, and only half of these factories remain under exclusive kibbutz ownership. The modern kibbutz industry has evolved into a highly competitive, globalized sector. This transformation invites a fascinating exploration of its relationship with ESG (Environmental, Social, and Governance) principles. Driven by a unique communal DNA that prioritizes cooperation and long-term thinking, these corporations must simultaneously navigate purely commercial pressures, investor demands, and international regulations. The tension between these two forces-cooperative values versus global corporate demands—lies at the heart of the kibbutz industry's ESG story. Governance (G): Stakeholder-Based Frameworks The value-driven kibbutz DNA manifests structurally in several ways: Ownership Perspective: Even with external partners, kibbutz presence as a controlling stakeholder injects community welfare, employment continuity, and generational resilience into board-level decisions. This represents a natural model of Stakeholder Governance. Long-Term Horizon: As intergenerational assets, these factories willingly embrace long-term investments in green infrastructure and human capital, even when financial returns are not immediate. Accountability: Operating in close physical proximity to the community builds high local accountability, balancing financial returns with quality of life. Environmental (E): Localized Stewardship Because many factories sit directly inside or adjacent to residential kibbutz areas, management faces immediate incentives to look beyond mere regulatory compliance. Investing in energy efficiency, emission reductions, and advanced wastewater treatment directly preserves local quality of life while opening doors to global green markets. It creates a natural synergy where industrial solutions double as community benefits. Social (S): Employment Anchors and Resilience Employing approximately 38,000 workers - over 77% of whom reside deep in Israel's northern and southern peripheries - the kibbutz industry serves as a critical economic anchor. Rather than corporate philanthropy, this model represents an integrated community-regional economy that promotes employment stability and diversity. These factories actively include diverse demographics, including older adults, women, the Ultra-Orthodox community, the Arab sector, and people with disabilities. Furthermore, during national crises - such as the "Iron Swords" war - these factories have played a vital role in sustaining regional and civilian resilience near the borders. Conclusion Ultimately, the ESG discourse in the kibbutz industry is about shaping a distinct Israeli industrial model that proves global competitiveness can co-exist with deep social responsibility and environmental stewardship. To read the full article, visit our website in Hebrew.

The massive retirement wave of the "Baby Boomer" generation, combined with increasing employee turnover, has elevated organizational knowledge loss to a critical strategic risk. In the modern corporate landscape, managing and retaining intellectual capital is no longer just an operational task-it is a core pillar of corporate governance, organizational resilience, and long-term sustainability (ESG). While emerging AI tools and Large Language Models (LLMs) offer powerful ways to catalog and retrieve information, technology alone cannot solve the human element of knowledge preservation. Shifting the Paradigm: The Receiver’s Perspective Most historical research on knowledge retention has focused strictly on the departing employee. Our recent study, “Contextualizing the usefulness of knowledge received from retiring employees: leader behaviour and organisational culture,” shifts the focus to the most critical link in the chain: the successor (the receiver). For knowledge to create actual value, the incoming employee must not only receive it but also find it useful and applicable to their daily tasks. Through a comprehensive empirical study of knowledge-intensive industries, we examined how two primary contextual factors influence how successors perceive and utilize the knowledge they inherit: Transformational Leadership: Leaders who inspire, foster trust, stimulate intellect, and provide individual consideration. Organizational Culture of Innovation: An environment that encourages risk-taking, continuous learning, and open experimentation. Key Insights: The Powerful Role of Leadership The findings of our study reveal a nuanced and highly practical reality for modern managers: The Power of Synergy: When an organization possesses both an innovative culture and transformational managers, the transfer of knowledge is highly effective. Successors feel empowered to absorb and actively apply the informal, seasoned expertise of their predecessors. Leadership as a Safeguard: Most notably, the study found that transformational leadership acts as a critical buffer. In organizations where the culture is rigid or less supportive of innovation, a transformational leader can single-handedly compensate for these institutional shortcomings. Their personal support and encouragement give successors the confidence to utilize inherited knowledge effectively, even in less-than-ideal environments. Culture Alone is Not Enough: Conversely, an innovative culture on its own-without active, supportive leadership-is significantly less effective at ensuring that transferred knowledge is successfully put into practice. The Bottom Line for ESG and Corporate Governance From a Governance (G) and Social (S) perspective, mitigating the risk of knowledge drainage is vital for maintaining business continuity and protecting corporate value. Organizations must realize that cultivating "transformational" traits among middle and senior management is one of the most effective risk-management strategies available. By training leaders to actively support successors during generational handovers, companies can secure their intellectual property, foster internal innovation, and build lasting institutional resilience.

There are places that feel like a story before they feel like a country. As the plane landed in Paro, between the peaks of the Himalayas, it seemed for a moment that I had entered a space outside of time. No giant billboards, no glass towers, no clamor of a bustling city — only monasteries clinging to cliffs, prayer flags in the thin mountain wind, and a landscape almost impossibly powerful. Bhutan. A small kingdom between India and China, home to fewer than a million people, has long been seen as offering a different model of development — a country that declares it measures its success not through GDP alone, but through Gross National Happiness. When I first heard of it, I thought it was a brilliant branding move. In a world where countries compete for investment, tourists, and growth figures, Bhutan chose a narrative that sounds almost implausible: happiness matters more than output. I arrived skeptical, almost cynical, but curious. Behind the romantic image stands a country with a structured, institutionalized planning system. Since the 1970s, Gross National Happiness has been built around four pillars - sustainable economic development, environmental conservation, cultural preservation, and good governance - translated into nine domains and 33 indicators measuring health, education, community resilience, psychological wellbeing, and the environment. Bhutan is constitutionally committed to maintaining at least 60% forest cover (currently 69.7%) and remains on a path of carbon neutrality. The 13th Five-Year Plan (2024–2029) makes the picture more complex. It is not a declarative or philosophical document. It speaks of productivity, youth unemployment, the emigration of working-age labor, and structural dependence on hydroelectric energy - and it sets clear targets: raising GDP to roughly $5 billion by 2029, and becoming a High-Income GNH Economy by 2034. At the center of this strategy stands Gelephu Mindfulness City - a Special Administrative Region three times the size of Singapore, which has adopted Singapore's legal framework and Abu Dhabi's tax system to attract foreign investment, while maintaining a "negative list" of sectors that channels capital toward areas aligned with GNH: clean energy, fintech, smart infrastructure, and high-value tourism. I am not an expert in ESG regulation, and I do not claim that Bhutan offers an alternative model. But the Bhutanese case raises a basic question. In most corporations, ESG developed within a discourse of risk and compliance - how to reduce exposure, how to meet standards, how to improve ratings. In Bhutan, at least at the level of stated policy and planning, the order was reversed: values preceded the market, philosophy preceded measurement. I arrived skeptical. I left far more curious, and convinced that the Bhutanese are, in many ways, happy people. If there is one lesson the Bhutanese case offers ESG discourse, perhaps it is this: the most important question is not only how we measure responsibility, but at what stage of the story we let it in. In other words, perhaps Bhutan's contribution is precisely this invitation — to ask what happens when values do not join growth retrospectively, out of compliance and risk management, but precede it from the very beginning. Sivan Tapla, founder of "Israel-Bhutan" https://www.israel-bhutan.com לקריאת הרשומה בגרסתה המלאה, מוזמנים לבקר באתר שלנו בעברית.

This post marks two years since the Delaware Court of Chancery’s decision in McRitchie, 315 A.3d 518 (Del. Ch. 2024). The case is one of the most significant and comprehensive modern rulings on corporate purpose. The discussion proceeds in two parts: first, an overview of the case, its factual background, and the court’s holdings; second, its central contribution, a fundamental rethinking of corporate purpose. The court rejects both shareholder primacy and corporate social responsibility (CSR) as competing frameworks, and instead grounds corporate responsibility in compliance with positive law. What the McRitchie Case Held James McRitchie, a shareholder activist, promotes ״portfolio primacy", arguing that shareholders are also stakeholders, employees, customers, and creditors. Accordingly, directors should not focus solely on profit maximization, even if lawful, but must consider broader stakeholder impacts. McRitchie brought a test case, alleging that directors breached fiduciary duties by generating profits while causing significant social harm. He sought to reshape Delaware law, which had long held, in cases such as Revlon, Paramount v. Time, eBay, Massey Energy, and Trados, that directors must pursue the corporation’s purpose by lawfully maximizing corporate value. The Delaware Court of Chancery rejected his claims entirely. In a detailed 101-page opinion, the court reaffirmed existing law while clarifying it at an unprecedented level of depth. Crucially, it rejected both shareholder primacy and CSR as misleading dichotomies. The court emphasized that corporate purpose is defined by law, not by managerial declarations. Under the single-firm model, directors owe fiduciary duties to the corporation itself, not directly to stakeholders or shareholders. Shareholders benefit only indirectly. Even creditors, including in insolvency, do not become direct beneficiaries of fiduciary duties. The duty, as the court put it, is to protect and increase the value of the firm’s capital. Compliance with Law as the Core of Corporate Responsibility At first glance, McRitchie might appear pro-shareholder, since it rejects CSR. However, the court identifies a different and more effective mechanism for protecting stakeholders: mandatory compliance with law. Addressing the problem of externalities, the court explains that corporate law is not blind to them. Instead, external legal regimes and regulation provide the primary tools to address harms to employees, customers, and the environment. Violations of stakeholder rights are first and foremost violations of non-corporate law. Corporate law reinforces this by imposing liability on directors who knowingly cause or fail to prevent such violations, notably through doctrines like Caremark. Importantly, the duty to comply with law is mandatory (non-waivable). The court explicitly rejects the “law as price” theory, which treats legal violations as acceptable if profitable. In its words, such reasoning may pass in economics, but fails in corporate law. Thus, governments regulate externalities through law and regulation, while corporate law reinforces this framework by imposing accountability on directors. Compliance with the law is therefore not something to be balanced against profit maximization, but rather a prior and binding requirement. Conclusion McRitchie reaffirms a precise and disciplined vision of corporate law. It rejects the false dichotomy between shareholder primacy and CSR, and instead centers the corporation itself, governed by law. The solution to externalities is not expanding corporate purpose rhetorically, but strengthening legal compliance frameworks and enforcing them through corporate law doctrines. Corporate responsibility, therefore, is neither optional nor ideological. It is legal, mandatory, and foundational. To read the full article, visit our website in Hebrew. Dr. Asaf Raz, Senior Lecturer, Sha’arei Mishpat Academic Center; Research Fellow, University of Pennsylvania.

Gender inequality in science, technology, engineering, and mathematics (STEM) remains a persistent challenge for organizations in innovation-driven sectors worldwide. In Israel, a global hub for entrepreneurship and advanced technology, the underrepresentation of women in many STEM fields is especially significant. It affects talent availability, organizational creativity, and the ability to develop technologies for diverse populations. Therefore, it is not only a matter of fairness, but also a challenge that can weaken innovation leadership. From an ESG perspective, gender equality in STEM is closely linked to equal opportunity, inclusive decision-making, and growth based on diverse talent. Understanding where these gaps emerge—from secondary school, through higher education, and into the workforce—is critical for organizations, policymakers, and academic institutions. In Israel’s high-tech industry, women make up only about one-third of employees, with even lower representation in technological roles, senior management, and startup leadership. Women-led startups also receive only a small share of total investment capital. Although progress has been made, at the current pace it could take decades to close the gap. This has direct implications for innovation, as homogeneous teams may overlook diverse user needs and risks. The roots of inequality begin earlier. In academia, women’s participation in STEM degrees has grown, yet representation remains much lower in core technology fields such as computer science, mathematics, and engineering. At the high-school level, girls are less likely than boys to choose STEM tracks, often due to stereotypes, school climate, and social expectations rather than ability. Several factors help explain these patterns: social stereotypes, workplace cultures that are less supportive, limited mentorship opportunities, and behavioral barriers that reduce participation in leadership or development programs. At the same time, many organizations are taking action. Examples include early exposure programs for girls in coding and technology, mentoring initiatives, women’s leadership development in technological military units, and academic programs designed to support female STEM students. Research shows that even small, low-cost interventions can significantly improve participation and completion rates. In conclusion, promoting gender equality in STEM is both a social responsibility and a strategic advantage. Expanding women’s participation can strengthen innovation, improve competitiveness, widen the talent pool, and enhance employer branding. Meaningful progress requires long-term commitment, data-driven strategies, and coordinated action across education, academia, and industry. To read the full article, visit our website in Hebrew.

Anthropic, the company behind the AI tool Claude, recently published "Claude's Constitution" - a detailed public document outlining the values, ethical principles, and operational boundaries of its AI system. Unlike a generic code of ethics, this is a working document that explicitly acknowledges that AI is not "objective," but is driven by social and moral assumptions embedded at the core of the product itself. At first glance, this looks like a moral statement. But is it really? A Rational Economic Move Looking through the lens of economist Oliver Williamson's transaction cost theory, Anthropic's decision to publish a constitution is not necessarily a values-driven gesture - it's a rational economic strategy. In environments characterized by uncertainty, information asymmetry, and weak governmental regulation, companies need internal protection mechanisms to reduce risk and stabilize operations. When state-level safeguards are unreliable, building your own becomes a competitive advantage. The Shifting Balance of Power In recent decades, large corporations have grown wealthier and more powerful than most nation-states. Governments increasingly depend on tech giants to manage critical infrastructure, and corporations hold a clear advantage when it comes to data and information control. In this reality, the pressure to regulate corporate behavior has shifted away from governments toward other mechanisms - including financial markets, shareholders, and the companies themselves. Voluntary Regulation as a Governance Tool Anthropic's constitution is a form of voluntary self-regulation - not imposed by the state, but emerging from within the business sector. By publicly committing to ethical boundaries (for example, Claude will not assist in creating manipulative content, even when asked), Anthropic signals to consumers, regulators, and business partners: "This tool is not a weapon; it can be trusted". Furthermore, by shaping its own rules now, the company aims to get ahead of potentially far stricter government or supranational regulation down the line. This logic was put into action beyond paper: Anthropic publicly confronted the U.S. Department of Defense, demanding that the Pentagon commit to boundaries on how Claude could be used - before agreeing to work with them.   A New Model for ESG? Anthropic's constitution may represent a broader shift - one where ESG, voluntary regulation, and technological innovation converge. A model in which corporate responsibility is not at odds with business interest, but an inseparable part of it. Yet important questions remain: In an era where businesses are shaping the very regulations they operate under - what is the new role of regulators? Do they still represent the broader public interest? And what tools do governments need to navigate this challenging new landscape? To read the full article, visit our website in Hebrew.