Why and How Investors Use ESG Information: Evidence from a Global Survey

By A. Amel-Zadeh, George Serafeim. Financial analysts journal, 2018

1,347 citations recorded by the source corpus.

Using survey data from mainstream investment organizations, we provide insights into why and how investors use reported environmental, social, and governance (ESG) information. Relevance to investment performance is the most frequent motivation, followed by client demand, product strategy, and then, ethical considerations. An important impediment to the use of ESG information is the lack of reporting standards. Among the various ESG investment styles, negative screening is perceived to be the least beneficial to investments and is driven by product and ethical considerations. Full integration and engagement are considered more beneficial and are driven by relevance to investment performance. A practitioner's perspective on this article is provided in the In Practice piece "ESG Investing Moves to the Mainstream" by Keyur Patel, online 18 June 2018. Disclosure: Professor Serafeim serves on the advisory board of investment organizations that practice various environmental, social, and governance styles. Professor Amel-Zadeh received a research grant from Bank of New York Mellon supporting this research. He also received speaker honoraria from the same organization. Editor’s Note Submitted 19 October 2017 Accepted 23 February 2018 by Stephen J. Brown This article was externally reviewed using our double-blind peer-review process. When the article was accepted for publication, the authors thanked the reviewers in the acknowledgments. John Christopher Hughen, CFA, CIPM, was one of the reviewers for this article.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/703510f540f2ba25cd1361741f8cdbd53ec4a065

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Citations in the corpus

Rewriting History II: The (Un)Predictable Past of ESG Ratings (2020, methodology): “Survey evidence by Amel-Zadeh and Serafeim (2018) shows that 82% of investment professionals use ESG information in the investment process, but 26.4% also indicate a lack of ESG rating reliability. Tang et al. (2020) show that firms connected to MSCI through institutional ownership receive higher ES”
Greening monetary policy (2019, neutral): “Amel-Zadeh and Serafeim (2018) report that negative screening is the most usedmethod among investment professionals.”
Why is Corporate Virtue in the Eye of The Beholder? The Case of ESG Ratings (2021, neutral): “…disagree a lot more when the stakes are high, as most investors are interested in identifying the best ESG performing companies in positive screening and best-in-class strategies, or the worst ESG performing companies in negative screening and engagement strategies (Amel-Zadeh and Serafeim 2018).”
Aggregate Confusion: The Divergence of ESG Ratings (2020, background): “Our paper complements research documenting that there is a real and growing expectation from investors that companies perform well in terms of ESG performance (Liang and Renneboog, 2017; Riedl and Smeets, 2017; Amel-Zadeh and Serafeim, 2018; Gibson and Krueger, 2018; Dyck et al., 2019), especially w”
Does the ESG Index Affect Stock Return? Evidence from the Eurostoxx50 (2020, background): “Recently well-known data providers, such as Bloomberg, Thomson Reuters and Investments banks (Morgan Stanley Capital International (MSCI)) have built some ESG ratings, also known as ESG score, underlying a substantial divergence of judgments [10,11] and great “confusion” on methodology and disclosur”
DOES ENVIRONMENTAL, SOCIAL AND GOVERNANCE PERFORMANCE INFLUENCE ECONOMIC PERFORMANCE? (2020, methodology): “ESG information is used by investors in making decisions about the companies’ economic performance (Amel-Zadeh & Serafeim, 2018).”
ESG Performance and Shareholder Value Creation in the Banking Industry: International Differences (2019, background): “Moreover, Amel-Zadeh and Serafeim [45] indicate, based on a global survey, that significant differences exist between European and North American investors in terms of their valuation of ESG performance.”
Public Sentiment and the Price of Corporate Sustainability (2020, neutral): “Thus, if institutional asset owners and retail investors value holding (avoiding) companies with positive (negative) sentiment momentum, asset managers will act to satisfy their clients’ preferences (Amel-Zadeh and Serafeim 2018).”
The Importance of Climate Risks for Institutional Investors (2020, background): “Amel-Zadeh and Serafeim (2018), for example, report an average ESG share of less than 15% in their sample”
The expansion of non-financial reporting: an exploratory study (2018, neutral): “Amel-Zadeh and Serafeim (2017) provide insights into why and how investors use reported environmental, social and governance (ESG) information.”