Tag Archives: ESG

How to Contract for ESG: Sustainability-Linked Bonds and a New Investor Paradigm 

By | July 14, 2022

Companies today are facing unprecedented pressure to make progress on environmental, social, and governance (ESG) issues. The demand for companies to address these issues is not new, but a relatively recent development is that this demand now comes from investors, rather than activists or other stakeholders. The pressure from investors has caused many companies to… Read More »

De-Facto Financial Regulation in the Form of Corporate Criminal Liability for ESG is Coming 

By | June 23, 2022

Traditional financial regulation would take the form of legislation passed by Congress and then interpreted by agencies. We are not in that world anymore. Given Congressional paralysis, de-facto financial regulation is being pushed by the setting of agency agendas and being communicated to the business community through announcements of priorities and prosecutions.  For example, despite… Read More »

Are All ESG Funds Created Equal? Only Some Funds Are Committed 

By | June 22, 2022

“The major problem that I have is that even if they’re [ESG funds] marketed correctly, they actually have no demonstrable impact.”1  Tariq Fancy, the former head of BlackRock’s sustainable investing  Flows into ESG mutual funds have increased markedly over recent years, raising the question of whether these capital flows lead to improved ESG policies in… Read More »

ESG as a Business Model for Small & Medium-Sized Enterprises 

By | June 21, 2022

As the world returns to something more recognizably normal, it seems natural to ask what the economy will look like after the pandemic. Will things ever go back to how they were, or are we facing a new – and altogether different – reality?   Whenever a crisis – political, economic, or social – impacts… Read More »

Sustainability or Greenwashing: Evidence from the Asset Market for Industrial Pollution

By | June 2, 2022

In response to increasing pressures from activists, regulators, and governments, firms are accelerating the divestment of polluting assets. While this trend reflects mounting concerns about climate change, a natural question is how effective these divestments are in reducing pollution. On the one hand, Environmental, Social, and Governance (ESG) supporters can point to successful pressures that… Read More »

ESG ETFs and the Costs of Information Synthesis

By | October 4, 2021

            Despite likely being the most successful investment product since the 2008 global financial crisis, exchange traded funds (ETFs) have a serious comparability problem. The problem is particularly acute in environmental, social, and governance (ESG) themed funds, which have benefited from a recent surge in investor interest. A post-crisis explosion in ETF product offerings, combined with extensive issuer discretion in the composition, replication and tracking… Read More »

Costly Environmental and Social Incidents: New Evidence from Equity Issuance

By | August 5, 2021

There is a burgeoning awareness of corporate social performance in the current business climate. Yet, there remains much confusion over the value proposition of corporate nonfinancial investments in the environmental, social, and governance (ESG) areas. To date, the bulk of research attempts to link firm-level ESG ratings provided by third-party rating agencies to a wide… Read More »

Does It Pay to Invest in Sustainable Startups?

By | June 30, 2021

Sustainable investing (or impact investing) is arguably the hottest topic in global finance. Morningstar reports that ESG-oriented mutual funds’ net capital inflows quadrupled in 2019 to $20 billion, and signatories to the Principles for Responsible Investments (PRI) had $86 trillion assets under management (AuM) in the same year. However, the economics of sustainable investing are contentious… Read More »

How Policymakers Can Defuse a Major ESG Threat to Shareholder Rights

By | June 7, 2021

Since 2004, when the term “ESG” was first used in a report published by the United Nations Global Compact, there has been an explosion of interest in the concept, including in corporate boardrooms. The Global Compact, in a follow-up report the next year, described the emergence of ESG corporate policies as a “powerful and historic convergence … between the objectives… Read More »

What Is the Impact of Mutual Funds’ ESG Preferences on Portfolio Firms?

By | May 27, 2021

Institutional ownership has increased tremendously over the past few decades. This shift in ownership has led to major concerns as to whether institutional investors have the incentives or the tools to be active shareholders. Assessing how effective institutional investors are in their stewardship activities has therefore become critical. However, such an assessment has proven difficult,… Read More »