Environmental, social, and governance factor and financial returns: what is the relationship? Investigating environmental, social, and governance factor models
{"title":"Environmental, social, and governance factor and financial returns: what is the relationship? Investigating environmental, social, and governance factor models","authors":"Karoline Bax , Eleonora Broccardo , Sandra Paterlini","doi":"10.1016/j.cosust.2023.101398","DOIUrl":null,"url":null,"abstract":"<div><p>Sustainable finance and environmental, social, and governance (ESG) issues have garnered significant attention in both industry and academia. However, the lack of consensus on these concepts has led to confusion about their impact on investors and markets, hindering the interpretation of empirical data and the development of effective regulations. This highlights the need for transparent analyses from the finance research community. By reviewing recent asset pricing literature to determine if it has effectively identified an ESG factor, the paper examines theoretical models linking ESG factors to asset performance, with differing views on whether high-ESG firms yield lower returns due to reduced risk or outperform due to sustainable practices and market sentiment. The paper also reviews empirical studies, presenting findings on whether green assets outperform brown assets in financial markets. The paper contributes to the debate on integrating ESG into investment strategies without compromising returns, providing practical insights for investors and policymakers navigating responsible investing.</p></div>","PeriodicalId":294,"journal":{"name":"Current Opinion in Environmental Sustainability","volume":"66 ","pages":"Article 101398"},"PeriodicalIF":6.6000,"publicationDate":"2024-01-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.sciencedirect.com/science/article/pii/S1877343523001458/pdfft?md5=a3c0852c84fd79f8ed56e851e8cb2039&pid=1-s2.0-S1877343523001458-main.pdf","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Current Opinion in Environmental Sustainability","FirstCategoryId":"93","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S1877343523001458","RegionNum":2,"RegionCategory":"环境科学与生态学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ENVIRONMENTAL SCIENCES","Score":null,"Total":0}
引用次数: 0
Abstract
Sustainable finance and environmental, social, and governance (ESG) issues have garnered significant attention in both industry and academia. However, the lack of consensus on these concepts has led to confusion about their impact on investors and markets, hindering the interpretation of empirical data and the development of effective regulations. This highlights the need for transparent analyses from the finance research community. By reviewing recent asset pricing literature to determine if it has effectively identified an ESG factor, the paper examines theoretical models linking ESG factors to asset performance, with differing views on whether high-ESG firms yield lower returns due to reduced risk or outperform due to sustainable practices and market sentiment. The paper also reviews empirical studies, presenting findings on whether green assets outperform brown assets in financial markets. The paper contributes to the debate on integrating ESG into investment strategies without compromising returns, providing practical insights for investors and policymakers navigating responsible investing.
期刊介绍:
"Current Opinion in Environmental Sustainability (COSUST)" is a distinguished journal within Elsevier's esteemed scientific publishing portfolio, known for its dedication to high-quality, reproducible research. Launched in 2010, COSUST is a part of the Current Opinion and Research (CO+RE) suite, which is recognized for its editorial excellence and global impact. The journal specializes in peer-reviewed, concise, and timely short reviews that provide a synthesis of recent literature, emerging topics, innovations, and perspectives in the field of environmental sustainability.