Journal of Sustainable Finance and Investment
31 PagesPosted: 26 Oct 2020Last revised: 29 Jul 2022
See all articles by Ulrich Atz
Ulrich Atz
New York University (NYU) - Center for Sustainable Business
Tracy Van Holt
Insight Network LLC
Zongyuan Zoe Liu
John Hopkins University, School of Advanced International Studies
Christopher Bruno
The Wharton School, Management Department
Date Written: July 22, 2022
Abstract
Sustainability in business and ESG (environmental, social, and governance) in finance have exploded in popularity among researchers and practitioners. We surveyed 1,141 primary peer- reviewed papers and 27 meta-reviews (based on ~1,400 underlying studies) published between 2015 and 2020. Aggregate conclusions from a sample suggest that the financial performance of ESG investing has on average been indistinguishable from conventional investing (with one in three studies indicating superior performance) – in contrast with research in the wider management literature as well as industry reports. Until recently top finance journals did not publish climate change related studies, yet these studies capture the frontier of corporate risk and ESG investment strategies. We developed three propositions: first, ESG integration as a strategy seems to perform better than screening or divestment; second, ESG investing provides asymmetric benefits, especially during a social or economic crisis; and third, decarbonization strategies can potentially capture a climate risk premium.
Keywords: sustainability, climate change, financial performance, ESG, meta-analysis, review
JEL Classification: A13, G23, G30, M14, M41
Suggested Citation:Suggested Citation
Atz, Ulrich and Van Holt, Tracy and Liu, Zongyuan Zoe and Bruno, Christopher, Does Sustainability Generate Better Financial Performance? Review, Meta-analysis, and Propositions (July 22, 2022). Journal of Sustainable Finance and Investment, Available at SSRN: https://ssrn.com/abstract=3708495 or http://dx.doi.org/10.2139/ssrn.3708495
Ulrich Atz (Contact Author)
New York University (NYU) - Center for Sustainable Business ( email )
44 West 4th St.
New York, NY 10012
United States
Tracy Van Holt
Insight Network LLC ( email )
New York, NY New York 10001
United States
HOME PAGE: http://www.insightnet.co