Energy and Investing

There are two primary factors that affect expected returns for companies with high ESG ratings – investor preferences and risk. Although investor preferences for highly rated ESG companies can lower the cost of capital, the flip side of the coin is lower expected returns for investors. Regarding risk, the jury remains out on whether there…

Using criteria based on environmental, social and governance (ESG) considerations has become an increasingly important aspect of investment decision making, particularly for high profile institutional investors.  As of 2019, sustainable assets under management were estimated to be $30 trillion worldwide.  The claim here is that the enthusiasm for ESG investing has been exaggerated for three…

Bradford Cornell and Aswath Damodaran 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…

The public debate regarding climate change rages daily in the popular press and in the halls of Washington. This report takes a different tack and focuses on the investment implications of what we call the great transformation away from reliance on carbon-based fuels.