There is some level of mixed research results on the stock advantages of companies that invest in ESG. Bloomberg put together a solid article 'Academics Question ESG Studies That Helped Fuel Investing Boom' that indicates research may not support the stock return value of ESG.
One of the researchers Andrew King stated, "Despite exhaustive analysis, we found no reliable link between corporate sustainability and future stock return.” (King, 2022, para 2).
Is that the final answer on ESG? Not really because there may be others who have a different view.
First, let us define ESG. What is ESG?
Some have argued something different and provided a meta-analysis around the same time period that would indicate an opposite effect on ESG and Financial Performance. There is a neutral to positive advantage to companies that engage in ESG.
Let me say that when there are mixed results one cannot conclusively say with absolute certainty whether supporting ESG makes a big difference in firm performance or not. What we can say is that by the limitations-delimitations of the studies they may in some cases and may not in other cases (Assuming that both studies are valid.)
This is where researching the fine details of each study can help and under what conditions ESG is or is not helpful. That still would not give you a final result. However, as more research comes out what we often find is that the conditions and parameters are defined through the body of knowledge.
Change a metric and you may find something different. A breadth of related research studies around similar topics will provide a greater perspective. That takes time and scientists. Our nation needs more scientists!
This is where you have to answer the questions for yourself
1. Does ESG have profit, moral, social, or environmental goals?
2. Should government legislate or not legislate these issues?
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