Results from a global study suggest that ESG investing did not systematically affect investment performance during the past two decades.
- There is little evidence to suggest that ESG ratings are systematically related to global stock returns. This finding obtains across different regions, time periods, ESG (sub)ratings, ESG momentum, ESG downgrades and upgrades, and best-in-class strategies.
- The lack of an ESG-return relation implies that ESG investing has not lowered the cost of capital for strong ESG firms and has not come at the expense of investment performance over the past 20 years.
Mathijs van Dijk, Erasmus University, Rotterdam School of ManagementSome of the key statements quoted from the paper (refer to the ESG Research section)A popular view in both academic research and the financial industry is that investors can “do well while doing good.”"Yet, there are reasons to be skeptical about a consistently positive relation between ESG and stock returns. First, many underlying studies are limited in scope. They use ESG ratings from a single provider, even though there can be considerable differences across providers."
