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Millions of investors and countless fund managers direct their investments to companies that are highly-rated on the basis of their environmental, social, and governance (“ESG”) activities in an attempt to do good. The claim by ESG advocates, pundits, and many academics that highly-rated ESG companies and funds also deliver superior returns bolsters this move: Doing better by doing good. The best of all worlds.
But do ESG ratings really deliver on the promise? Are highly-ranked ESG businesses really more caring of the environment, more selective of the societies in which they operate, and more focused on countries with good corporate governance? In short, is ESG really good? The answer is no.
Read the entire article on the Harvard Law School Forum on Corporate Governance
Bloomberg Green also covered the study. Read more »
About the authors
Jurian Hendrikse is a PhD Candidate at the Tilburg School of Economics and Management. This post was co-authored by Mr. Hendrikse; Elizabeth Demers, Professor of Accounting at the University of Waterloo; Philip Joos, Professor of Accounting at the Tilburg School of Economics and Management and and part of the TIAS Finance LAB; and Baruch I. Lev, Philip Bardes Professor Emeritus of Accounting and Finance at NYU Stern School of Management.