A Review on ESG Investing: Investors’ Expectations, Beliefs and Perceptions

Kräussl, Roman; OLADIRAN TOBI EZEKIEL, Tobi; STEFANOVA, Denitsa

doi:10.1111/joes.12599

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A Review on ESG Investing: Investors’ Expectations, Beliefs and Perceptions

Kräussl, Roman; OLADIRAN TOBI EZEKIEL, Tobi; STEFANOVA, Denitsa

2024 • In Journal of Economic Surveys, 38 (2), p. 476-502

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https://hdl.handle.net/10993/58489

DOI
10.1111/joes.12599

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Keywords :

ESG, Environmental, Social, Governance, Sustainability, Social Impact, Greenwashing, Performance

Abstract :

[en] This study examines the recent literature on the expectations, beliefs and perceptions of investors who incorporate Environmental, Social, Governance (ESG) considerations in investment decisions with the aim to generate superior performance or make a societal impact. Through the lens of equilibrium models of agents with heterogeneous tastes for ESG investments, green assets are expected to generate lower returns in the long run compared to their non-ESG counterparts. However, in the short run, ESG investments can outperform non-ESG investments through various channels. Empirically, results of ESG outperformance are mixed. We find strong empirical evidence in the literature that investors have preference for ESG and that their actions can generate positive social impact through engagement. The shift towards more sustainable policies in firms is motivated by the increased market values and the lower cost of capital of green firms driven by investors’ choices.

Disciplines :

Finance

Author, co-author :

Kräussl, Roman; Bayes Business School (formerly Cass), Hoover Institution, Stanford University

OLADIRAN TOBI EZEKIEL, Tobi ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Finance (DF)

STEFANOVA, Denitsa ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Finance (DF)

External co-authors :

yes

Language :

English

Title :

A Review on ESG Investing: Investors’ Expectations, Beliefs and Perceptions

Publication date :

April 2024

Journal title :

Journal of Economic Surveys

ISSN :

0950-0804

eISSN :

1467-6419

Publisher :

Wiley, Oxford, United Kingdom

Volume :

Issue :

Pages :

476-502

Peer reviewed :

Peer Reviewed verified by ORBi

Focus Area :

Finance

Funders :

FNR - Fonds National de la Recherche

Funding number :

14592898

Available on ORBilu :

since 30 November 2023

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