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 reasons.  First, it is not clear what constitutes an ESG investment in the context of a complex, integrated economy.  Second, the impact on investment performance of a preference for ESG investments has not been sufficiently recognized outside academic circles.  Finally, many leading practitioners have stated that the importance of ESG considerations implies the corporate objective of maximizing shareholder value, which lies at the core of much of finance theory, is outdated and needs to be replaced by a more comprehensive stakeholder model.  The conclusion is that both the benefits of the traditional model and the dangers of a broader stakeholder model have not be adequately appreciated.         



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