ESG and Responsible Institutional Investing Around the World: A Critical Review

By Pedro Matos. Social Science Research Network, 2020

236 citations recorded by the source corpus.

This survey examines the vibrant academic literature on environmental, social, and governance (ESG) investing. While there is no consensus on the exact list of ESG issues, responsible investors increasingly assess stocks in their portfolios based on nonfinancial data on environmental impact (e.g., carbon emissions), social impact (e.g., employee satisfaction), and governance attributes (e.g., board structure). The objective is to reduce exposure to investments that pose greater ESG risks or to influence companies to become more sustainable. One active area of research at present involves assessing portfolio risk exposure to climate change. This literature review focuses on institutional investors, which have grown in importance such that they have now become the largest holders of shares in public companies globally. Historically, institutional investors tended to concentrate their ESG efforts mostly on corporate governance (the “G” in ESG). These efforts included seeking to eliminate provisions that restrict shareholder rights and enhance managerial power, such as staggered boards, supermajority rules, golden parachutes, and poison pills.

Subfields: Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/4c308b7958ddaaf4978df959c54f3d79dc826aae

Citations in the corpus

• Mandatory CSR and sustainability reporting: economic analysis and literature review (2019, unknown): “…for instance, Renneboog et al. (2008), Kitzmueller and Shimshack (2012), Crane and Glozer (2016), Brooks and Oikonomou (2018), Grewal and Serafeim (2020), and Matos (2020). result of exogenous events like an accident or natural catastrophe (e.g., Blacconiere and Patten 1994; Bonetti et al. 2018).”
• Firms and social responsibility: A review of ESG and CSR research in corporate finance (2021, unknown): “In their examination of state-owned firms, Hsu, Liang, and Matos (2018) conclude that the environmental choices of such firms are not significantly related to shareholder value when measured using either Tobin’s q or long-term profitability. Another study that concludes no relation is Humphrey, Lee,”
• ESG Rating Disagreement and Stock Returns (2019, unknown): “Other news outlets, policy-oriented think tanks, and practitioner-oriented publications have made similar observations (Wigglesworth 2018; Doyle 2018; Matos 2020).”
• The Big Three and corporate carbon emissions around the world (2020, unknown): “Finally, Matos (2020) points out that the Big Three could face political or business backlash if they become too involved in publicly opposing corporate management.”