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- W3123485291 abstract "In the last decade, companies have come under pressure to be socially conscious and environmentally responsible, with the pressure coming sometimes from politicians, regulators, and interest groups, and sometimes from investors. The argument that corporate managers should replace their singular focus on shareholders with a broader vision, where they also serve other stakeholders, including customers, employees, and society, has found a receptive audience with corporate CEOs and institutional investors. The pitch that companies should focus on doing good is sweetened with the promise that it will also be good for their bottom line and for shareholders. In this article, we build a framework for value that will allow us to examine how being socially responsible can manifest in the tangible ingredients of value and look at the evidence for whether being socially responsible is creating value for companies and for investors. <b>TOPIC:</b>ESG investing <b>Key Findings</b> • For ESG to increase company value, actions taken to improve ESG ratings have to result in either higher cash flows or lower risk, and there is the very real possibility that being good can lower value for some firms. • The evidence that being good improves a company’s operating performance (increases cashflows) is weak but there is more solid backing for the proposition that being bad can make funding more expensive (higher costs of equity and debt). • Investing in companies that are recognized by the market as good companies is likely to decrease, rather than increase, investor returns, but investing in companies that are good, before the market recognizes and prices in the goodness, has a much better chance of success." @default.
- W3123485291 created "2021-02-01" @default.
- W3123485291 creator A5008914635 @default.
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- W3123485291 date "2020-08-31" @default.
- W3123485291 modified "2023-10-01" @default.
- W3123485291 title "Valuing ESG: <i>Doing Good or Sounding Good?</i>" @default.
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- W3123485291 doi "https://doi.org/10.3905/jesg.2020.1.1.076" @default.
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