Sustainable Investing: Establishing Long-Term Value and Performance

Fulton, Mark R.; Kahn, Bruce M.; Sharples, Camilla

doi:10.2139/ssrn.2222740

Cited by 100 publications

(78 citation statements)

References 3 publications

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“…The results are consistent with Fulton et al. (); and Cheng et al. () who highlight the link between corporate governance and the idiosyncratic risks and therefore the cost of capital.…”

Section: Resultssupporting

confidence: 92%

“…Sustainability in business and investment decisions is a widely discussed topic. Initially focused on ethical and philanthropic motives, ESG evolved to a mainstream market aiming for a superior financial performance (Fulton et al., ). Simultaneously, the topic emerged to a big research field (Friede et al., ).…”

Section: Literature Reviewmentioning

confidence: 99%

“…On the one site, investors and asset managers integrate ESG factors to align moral values with their investment approach. On the other site, ESG investment strategies seek to mitigate risks and improve the financial performance of an investment portfolio (Fulton, Kahn, & Sharples, ).…”

Section: Introductionmentioning

confidence: 99%

“…Due to the rising market popularity, sustainability in business and investing emerged to an important research field with over 2,000 academic studies and controversial discussions (Friede, Busch, & Bassen, ). Recent literature states positive or mixed effects for ESG consideration in terms of corporate risk reductions and better ability to sense opportunities and improved financial returns for a long‐term horizon (Bassen, Hölz, & Schlange, ; Cheng, Ioannou, & Serafeim, ; Eccles, Ioannou, & Serafeim, ; Fulton et al., ; Verheyden, Eccles, & Feiner, ).…”

Section: Introductionmentioning

confidence: 99%

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ESG in credit ratings and the impact on financial markets

Kiesel

Lücke

2019

Financial Market

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This study examines environment, social, governance (ESG) consideration in rating reports published by credit rating agencies. 3,719 Moody's credit rating reports between 2004 and 2015 are examined and the ESG consideration is analyzed using a latent dirichlet allocation (LDA) approach. We further analyze the stock returns and credit default swap (CDS) spread changes to check whether ESG consideration has an effect on the capital market reactions. We find a small but present consideration of ESG in rating decisions. Within ESG, corporate governance plays the most important role. Moreover, the results reveal that ESG consideration is a significant determinant in the stock return and CDS spread around the rating announcement. We find that all ESG criteria are important for equity and debt investors.

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“…The results are consistent with Fulton et al. (); and Cheng et al. () who highlight the link between corporate governance and the idiosyncratic risks and therefore the cost of capital.…”

Section: Resultssupporting

confidence: 92%

Section: Literature Reviewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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ESG in credit ratings and the impact on financial markets

Kiesel

Lücke

2019

Financial Market

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“…This theory suggests, therefore, that the implementation of sustainability initiatives may not be profitable and, therefore, this is likely to destroy the value of the company. Although the literature on CSR and shareholder value creation provides mixed results [29][30][31], a growing number of studies support the value enhancing theory [13,16,18,19,[32][33][34][35][36].…”

Section: Literature Reviewmentioning

confidence: 99%

The Value Relevance of Environmental, Social, and Governance Performance: The Brazilian Case

Miralles‐Quirós

Gonçalves³

2018

Sustainability

172

122

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There is extensive literature on the value relevance of social responsibility for companies that operate in developed countries. However, little is known about the influence of these practices on the price of assets listed on emerging economies, such as Brazil. In this context, the aim of this study is to analyse whether social responsibility activities carried out by companies listed on the São Paulo Stock Exchange during the 2010-2015 period play a significant role in enhancing firm value. Unlike previous studies, we distinguish between the three modern pillars of sustainability: environmental, social, and corporate governance (ESG). Our overall results support the value enhancing theory rather than the shareholder expense theory. However, it is important to note that the results also show that the market does not significantly value the three ESG pillars. Specifically, the market positively and significantly values the environmental practices carried out by companies not related to environmentally sensitive industries. In contrast, the market positively and significantly values the social and corporate governance practices carried out by the companies belonging to these sensitive industries. These findings are relevant for both investors and the managers of these companies, policy makers, customers, and citizens concerned about ESG issues.

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Can we expect contribution from environmental, social, governance performance to sustainable development?

Tanjung

2021

Bus Strat Dev

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This work is among the first studies to review the Morgan Stanley Capital International (MSCI) ESG Leaders Index in Asian countries and other emerging markets, such as Brazil, China, and Russia. The relationships among gross domestic product (GDP), human development index (HDI), and a set of key indicators are the fundamental argument of this study. By applying 2SLS estimation from 2010 to 2018, this research examines the connection between environmental, social, governance (ESG) index, GDP growth, and HDI from nine countries as rated in the MSCI ESG Index. The objective is to test whether the index can be efficiently utilized to justify the notion that the adoption of ESG principles can positively influence sustainable development and inclusive growth. The post estimations reveal close relationships between the ESG index and GDP growth. However, the index is not an effective instrument for measuring the connection between HDI‐ESG because it has not yet had a direct effect on HDI. With this result, the index can be utilized to measure the connections with and investments made by countries and corporations for sustainable development.

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Sustainable Investing: Establishing Long-Term Value and Performance

Cited by 100 publications

References 3 publications

ESG in credit ratings and the impact on financial markets

ESG in credit ratings and the impact on financial markets

The Value Relevance of Environmental, Social, and Governance Performance: The Brazilian Case

Can we expect contribution from environmental, social, governance performance to sustainable development?

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